There is no harm in people wanting more anonymity and privacy on the blockchain – how to keep my bitcoin transaction anonymous is a huge concern these days.
Bitcoin transactions are traceable
Traditionally, the media has propagated the myth that Bitcoin is anonymous and used by criminals for money laundering purposes.
However, this couldn’t be further from the truth. All Bitcoin transactions are public, traceable, and permanently stored on the Bitcoin network. Bitcoin addresses are the only information used to define where Bitcoins are allocated and where they are sent. These addresses are created privately by each user’s wallet.
However, once addresses are used, they become tainted by the history of all the transactions in which they are involved; anyone can see the balance and all transactions of any address.
Since users usually have to reveal their identity in order to receive services or goods, “how to keep my bitcoin transaction anonymous” turns out to be quite a difficult question. As blockchains are immutable, it’s important to note that something untraceable now may be easy to trace in the future.
In short, if you own a Bitcoin address and use it to send or receive BTC, the history of your transactions is traceable. Everyone can see your exchange, the address of your trading partner and the amount of every transaction you made.
The transparent nature of the blockchain is actually one of the biggest precursors for answering this question: “How do I keep my Bitcoin transactions anonymous?”.
How to keep my Bitcoin transaction anonymous
Buy Bitcoin Anonymously
As you know, the more cryptocurrency regulations adopted by governments, the more difficult it is for users to buy Bitcoin anonymously on exchanges. To prevent potential crime and protect assets, many crypto exchanges nowadays have an unwavering KYC/AML policy, which means that anonymous transactions are almost impossible. As a result, if you want to find out the answer for the query “How to keep my Bitcoin transaction untraceable?”, you’ve got to look at other options.
One option is the anonymous Bitcoin exchange called LocalBitcoins.
1. Anonymous Bitcoin exchange
LocalBitcoins was created in June 2012 and is based in Finland. This company lets people from more than 248 different countries buy and sell Bitcoin using a variety of payment methods.
Unlike centralized cryptocurrency exchanges, LocalBitcoins is a peer-to-peer (P2P) platform, meaning that it allows buyers and sellers to trade directly without a third party. As a result, they’ve found a way to keep Bitcoin transactions anonymous.
The platform supports over 20 different real-world payment methods, including local bank transfers, PayPal, cash-in-hand meetups, cash in the post and others.
When you first register an account, you will not be asked to provide any identification documents for KYC purposes.
However, when using sites like this you should guarantee your safety further by using a VPN connection or the Tor browser. These methods will help you hide your IP address and location from the others.
2. Bitcoin ATM
Bitcoin ATMs are machines that accept cash and dispense Bitcoin in return. Some ATMs also buy Bitcoin from you and dispense cash in return.
Due to their anonymous nature, most Bitcoin ATMs have strict buying limits, with some even requiring KYC verification. However, you can find anonymous ATM machines that allow purchases without the need for identification.
All in all, this method isn’t as convenient as buying BTC on a P2P platform and the following disadvantages are certainly important to note:
- Most Bitcoin ATMs that do not require KYC only allow you to buy a limited amount of BTC.
- High fees. Sometimes you have to pay between 8% and 20% higher than the current market rate.
- Bitcoin ATMs vary from country to county. You will find many machines in the US, but a far lower distribution in others.
Send Bitcoin Anonymously
After purchasing using one of the aforementioned methods, you should think of how you can send Bitcoin anonymously. ‘How to keep my Bitcoin transaction anonymous’ should be at the forefront of your mind.
1. Bitcoin Mixing
As previously explained, Bitcoin transactions are recorded on a public ledger. Anyone who traces a public address can know the origin and/or destination of that transaction. So what’s the answer? Enter the concept of Bitcoin mixing.
Bitcoin mixing is a process that tries to break the linkability or traceability between addresses.
Mixing breaks the link between Bitcoin addresses by either creating temporary addresses or by swapping coins with other addresses of the same value. This makes it much harder to follow transactions on the blockchain.
Some decent Bitcoin mixing services you can choose are Smartmixer, Wasabi Wallet or Samurai Whirlpool.
However, this method does have some disadvantages:
- It’s not free – users have to pay for the service.
- Bitcoin mixing is often associated with Bitcoin laundering and Bitcoin washing, which you don’t want to be inadvertently involved in.
- You must trust the service providers not to steal your funds and keep your login history secure.
2. New addresses wherever you make a Bitcoin transaction
Many of the most popular Bitcoin wallets are HD wallets. Using the Ledger Nano X, Samourai wallet or Trezor, you can generate any number of receiving addresses you want.
This is obviously a great benefit, as if you use a new address every time you receive Bitcoin, it helps to keep those Bitcoin transactions untraceable. This method makes it very difficult for someone to link all of those random addresses to you.
How does that work? Well, imagine that a cybercriminal knows your one and only address. This person would then be able to track your balance through your transactions and work out how much you have stored. If it’s a sizeable amount, they may then go deeper, work out your real identity and steal your assets. It’s not a risk worth taking.
3. Privacy coin
Bitcoin is traceable and always has been. Many of the methods mentioned above are relatively long and elaborate ways to send Bitcoin in order to avoid the transparency of blockchains. However, the crypto community is quickly beginning to realize that to send coins anonymously, all you really need are privacy coins.
Privacy coins use advanced cryptography techniques to shield the addresses of both the sender and the recipient of a transaction. When making transactions with privacy coins, the amount of cryptocurrency transferred is also shielded, so isn’t traceable.
The idea of using privacy coins may not appeal at first, you might think ‘I need to keep my Bitcoin transaction anonymous, not by using BTC to buy another cryptocurrency to send’. In that case, you’ll be pleased to know that there’s a fourth and easier way to do it.
4. Private crypto wallet
The idea of sending Bitcoin anonymously is the main purpose of a private crypto wallet. With one, you can send Bitcoin (or other assets) without anyone being able to see the details of senders, receivers or how much was involved. That is exactly how you can keep your Bitcoin transactions anonymous.
The Incognito Wallet is exactly that. Incognito isn’t just another privacy coin like Zcash or Monero. Incognito turns all your favorite coins into privacy coins. One tap turns your Bitcoin into privacy Bitcoin. Another switches it back to being public again. Congratulations, you’ve just found the most convenient way to transact crypto anonymously.
The Incognito private crypto wallet is both user-friendly and technologically innovative. You don’t need to worry about using a new address with every transaction, nor do you need to wonder how to buy privacy coins. This wallet helps you with everything.
Just one click and everything’s done. Oh and by the way, it’s totally free.
Tips to keep my Bitcoin transaction untraceable
Use a privacy browser
If you weren’t aware, most common web browsers track your data, IP address, and history. Even when you’re using incognito mode. In lieu of this, when buying, selling or making Bitcoin transactions, you’re better off using a privacy browser like Tor or Brave.
Besides ad-blocking, these browsers prevent your data from being tracked. It’s the safest option when you’re dealing with your finances.
Use a VPN
A virtual private network (VPN) is a network that doesn’t store the history of your activities on their servers. It encrypts all of your Internet traffic and routes it through multiple servers of your choice at different locations before arriving at the final location.
Some VPNs also maintain a shared IP address for multiple users, hence making it untraceable to one person’s identity – much like some Bitcoin transaction sites.
Using VPNs is another way to improve the anonymity of your Bitcoin transactions. But in this case, you have to trust the VPN service provider not to log your activities.
Do not publicize yourself
Unless your intention is to receive public donations or payments with full transparency, publishing a Bitcoin address on any public space such as a website or social network is not a good idea. If you choose to do so, always remember that even if you move any funds from this address to one of your other others, everyone, even the bad guys, can track every single movement.
Self-awareness is always necessary. If you want anonymity and privacy, there’s no reason to publicize yourself on the chaotic Internet. You might do it accidentally, but the loss of assets will always be deliberate.
When Satoshi Nakamoto first created Bitcoin, he wanted a transparent and traceable public blockchain, so that everyone could see each other’s balance. Bitcoin was really aimed at bringing freedom to the financial world.
However, as time passes by, problems have arisen and so there’s no harm in people wanting more anonymity on the blockchain. Keeping Bitcoin transactions anonymous to prevent any potential crime is just an act of self-protection. As we’ve seen, anonymity and privacy are needed for good reason, it’s not just associated with money laundering anymore.