So You Thought Your Bitcoin Deals Were Private
The Public is Often Mislead to Believe That Bitcoin is an Anonymous and Private Transfer Of Value.
One of the common misconceptions about cryptocurrency is that the transactions on a blockchain are always private. While it is true that a blockchain won’t directly reveal user identity in a transaction, the origin is often traceable in cryptocurrencies with public blockchains. The amount sent and received in each transaction is sent across a public ledger, in plain sight of the public eye. The sequence of information that is stored in immutable blocks can be followed all the way backward to the beginning of the chain.
Prelude To The Privacy Misunderstanding
Bitcoin was the first cryptocurrency, and with this new digital money, its creator, known only by the pseudonym Satoshi Nakamoto, introduced the original Blockchain in 2009. Satoshi Nakamoto was obviously an EXPERT in keeping himself hidden, because still to this day nobody has yet to find the real Satoshi. This fact may be the main reason why masses of people believe Bitcoin to be a private and anonymous coin, but this is simply NOT what Bitcoin is. Satoshi took extremely precise measures that would be considered challenging to the average person in order to keep himself in the hidden in the shadows. At the time of writing, The Bitcoin network is the most widely used blockchain, and Bitcoin is the most popular cryptocurrency in the world. This is why it is important for the public to understand the limitations of Bitcoin if used carelessly.
The Newbies
Word to the cranky Veterans of "old school" crypto: We were all newbies once. Even you! So stop bitching and help them learn! Otherwise you might just be a troll.
When arriving to the crypto-space, most people come to a vague understanding of how cryptocurrency works - but it is complex and clouded by terms like pseudo-anonymous and decentralized. It gets even more baffling as you discover that Bitcoin is sent through the Blockchain using cryptography to secure the data that is subsequently distributed to the public in a digital ledger.
Cryptography Means Anonymous Right? WRONG. Sorry.
Just because a transaction’s source and destination are cryptographic addresses, does not mean the owners of those addresses can not be revealed through forensic mapping or tracing. In fact, even if a user changes their address with every transaction, their identities can still be revealed.
Naturally, a baffled thinker may pose (valid) questions like these:
| While Learning About Blockchain, You May Ask Yourself Something Like This. | Or You Might Ask A Skeptical and Sensible Question Like This | You Might Start To Second Guess Your Fellow Humans And Say Something Like This. |
|---|---|---|
| How can a public record such as the original blockchain, be described as a private chain of data? Isn’t this a contradiction? | How can something that requires confirmation and validation by multiple parties before being saved in a public ledger be described as untraceable? | If the origin of a Bitcoin transaction can be pinpointed with forensic analysis and scrutiny why do so many people think that Bitcoin is private? |
These misunderstood concepts are so common that within their own site the developers of Bitcoin dedicate an entire page to the importance of protecting privacy. They adamantly warn users that Bitcoin is not anonymous and that user privacy is not guaranteed.
| Text From Bitcoin.org | Why it matters |
|---|---|
| “Bitcoin is often perceived as an anonymous payment network. But in reality, Bitcoin is probably the most transparent payment network in the world. At the same time, Bitcoin can provide acceptable levels of privacy when used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your privacy.” Bitcoin.org Privacy Warning | This comes directly from bitcoin developmental team which means ... they really want to emphasize the fact that Bitcoin users need to be cautious to protect their right to privacy. |
Who Cares If Bitcoin Is Private or Not Private?
Some people feel unaffected by the potential to be exploited using their Bitcoin history. Here are some reasons why the average consumer might care about privacy in their cryptocurrency use:
| Negotiation power is undermined when a buyer’s spending habits are exposed to a seller. Businesses who are savvy to blockchain analysis could monitor their customers spending habits and adjust pricing according to the details that their customers may not realize they are even sharing. | People who understand very basic blockchain can see the balance in your wallet addresses. Knowing what a customer can afford creates an unfair advantage for the vendor which could lead to abusive price increases. If companies knew the available balance of their customer’s wallets at all times, it would open the potential for constant mistrust between consumers and the vendors that provide them with goods and services. We all hope that we can trust the brands we are loyal to, yet, given the potential for inflated prices- consumers would be rightfully suspicious with every price increase. | Privacy should be a priority for the economic health of modern consumers. An individual who wants to shield his or her personal finances should be able to do so. It is our natural instinct to safeguard the value we have accumulated. The level of privacy that people deserve cannot be achieved when using Bitcoin. The freedom and safety that people want is not a certainty unless using a truly private cryptocurrency. |
|---|---|---|
*The Honeymoon Passes, Reality Is Cool. Don't Worry!
As you exit the Bitcoin honeymoon phase, reality takes a hold of your logical mind. You will discover some fundamental privacy needs that Bitcoin does not satisfy. No matter how cleverly designed Satoshi Nakamoto’s Blockchain is, people are often surprised, and sometimes deeply concerned by the revelation that Bitcoin transactions are not private or anonymous.
Veil Privacy Coin Is ACTUALLY Private
True privacy is not something Veil users have to opt-in for, thanks to Veil’s “always-on” privacy features- explained in the Veil Project Technology page. Without having to open the door to your personal finances, you are able to control the flow of the currency that belongs to you, without ever revealing the origin or the destination of the Veil that is transacted.
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