More on transactions, the blockchain and privacy.
This post was supposed to be about what to do with your cryptocoins, but I decided to talk about the blockchain instead. It is the most confusing apart of the whole cryptocurrency system.
Blockchain
The simplest way to look at the blockchain is to picture a huge collection of see through collection boxes that can be filled but not opened. Each box holds one transaction.
A transaction could be :
- cryptocoins transferred to your wallet after you buy cryptocurrency from a seller
- cryptocoins transferred from your wallet to an exchange
- and so on
Privacy
As stated above, the boxes are see through, everyone can see what happens to it.
You may have watched more than a few YouTube movies on Bitcoins or other cryptocurrency to grasp what it is all about. You may also have noticed that many people put a receive address in the comments. Why would they do that? Simple, some YouTubers randomly pick one of the comments and donate a certain amount of Bitcoins. Some YouTubers add a receive address to their movie to get donations from people who find the content of the video helpful.
I am using one of these receive addresses to show you what information the blockchain displays to everyone.
- Go to http://www.blockchain.info
The screen will show you the latest transactions of the blockchain at the top. Below that you will find a search field
- Copy paste the following address into that search field 1PS8umTH2cTVwCjJrwtjVa8oruZJMGE944
- Click 'Search'
The next screen will show you all transactions related to that receive address (scroll down to see them all). Note that more than one transaction can be related to a receive address. Every transaction however, has it's own unique ID in the blockchain.
Everyone can see this information, so this is not private at all. But, there is no information on who is the owner of this receive address. There is your anonymity.
As long as your coins float around in the blockchain, you could say there is some anonymity. When you bring money in, or take money out, by converting your coins into fiat (or the other way around), there will be records of that with your bank or credit card company and so on.