Michael Perklin, head of information security at ShapeShift, explained several reasons why bitcoin should not be considered an anonymous cryptocurrency.
In an interview for Binary District, an international collaboration community on new technologies, Perklin explained that bitcoin is one of the most easily traceable cryptocurrencies and that thanks to anti-money laundering (AML) policies and know your client (KYC) that they are applied to most of the cryptocurrency exchange platforms of the ecosystem, it is not impossible to trace the identity of someone who makes transactions and who possesses a bitcoin portfolio.
Likewise, Perklin emphasized that the idea promoted by some media outlets that claim that bitcoin is an anonymous cryptocurrency are totally wrong.
Bitcoin is one of the most trackable currencies on the planet and contrary to the false reports of the media in recent years, bitcoin is not anonymous and offers very little privacy protection to its users.
If a user values privacy above all, face-to-face meetings in which values, products, and services are exchanged privately, will ensure that no fingerprints are left behind.
The fact that transactions in bitcoin (BTC) are traceable and that the main platforms that support it store personal data of its users, means that bitcoin is not a private cryptocurrency at all. However, this lack of privacy could lead to security issues, according to Perklin, since in the case that these platforms were hacked (as has happened previously), valuable personally identifiable information (PII) could be compromised.
By storing PII on your servers, your company accepts the risk of safeguarding it for each of its clients and if your systems are violated, you will not only lose your data, but also those of your clients.
Currently there are several solutions that could be applied to increase the level of privacy of transactions with bitcoins, such as MimbleWimble and Tumblebit, which execute protocols that make it very difficult to track transactions with this cryptocurrency. However, while the regulations that oblige exchange bureaus to keep personal data of their users continue to exist, transactions made with bitcoins can not have total privacy.
In this way, it can be seen that the arguments about the use of bitcoin as an important means of payment in illicit activities due to its alleged irrastreability are not correct. For example, recently it was reported that Bill Gates made some comments of this style, when doubting the privacy that cryptoactives can provide. In addition to Gates' comments, according to the US Center for Financial Sanctions and Illicit, only 1% of bitcoin transactions come from illicit sources.