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So You Thought Your Bitcoin Transactions Were Private

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In the post below I will share a cool article that I wrote a couple months ago. 

The reason I am sharing it again is because @williamshennie9 and @bmg inspired me with their conversation

in another thread here in the Stake Forum which you can check out at this link :  

My orginals here and linked below/  

https://www.linkedin.com/pulse/so-you-thought-bitcoin-transactions-were-private-lori-brown/

 

https://steemit.com/bitcoin/@lorilikes/so-you-thought-bitcoin-transactions-were-private-a-realistic-view-of-a-flawed-public-understanding-plus-a-recommendation-that

 

 

And for those who are lazy, here it is in full form. 

So You Thought Bitcoin Transactions Were Private.

Published on January 20, 201

Lori Brown

Professional Writer | Journalist | Authentic Human | Spiritual Student of Life | G... See more

27 articles

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 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

A note to the cranky Veterans of "old school" crypto: We were all newbies once. Even you! So stop trolling, and help them learn!

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:

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.

Quote

 

Text From Bitcoin.org

“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 the Bitcoin development 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. Check out  alt coins with improved privacy coin to add to your "hodlings."

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Great post you've made Lori! I know there are still a lot of people who think that you can use bitcoin anonymously, but they forget that the ledger is public, and open to all, so all your transactions can be traced to wallet addresses.

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23 minutes ago, williamshennie9 said:

Great post you've made Lori! I know there are still a lot of people who think that you can use bitcoin anonymously, but they forget that the ledger is public, and open to all, so all your transactions can be traced to wallet addresses.

Thanks William. As long as people make an effort to use new addresses as often as possible they will not likely have to worry about it. There are those few crazy blockchain mappers that can somehow analyze the chain and if you repeat the same address throughout many transactions, eventually - with much effort- the details can be traced to its origin ( the user ) .  

This doesn't make a person more vulnerable to theft, but it does pose privacy concerns as well as gives opportunistic scammer types the fuel they need to impersonate someone or exploit the data in other harmful ways. 

Best practice is simply to use new addresses within your wallet as often as you are expecting payments.  It just resolves a potential heap of problems. 

Cheers.

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you right cause every time you sign up a  for a wallet they want you name addy etc. but only for trading or selling and buying.,suppose to be anonymous but what anonymous if you have to share your info..not only that submit a picture id to prove is you.. and they say for added security.., the hell being anonymous means not sharing your info... wth.. seems like say one thing but do the other,, stake has an anonymous sorta.. having and confirming your email.. and still have email trace through any means.. even though you can lie about the info on the email.. they put add mobile to call for a 1 time code.. another way to get info.. lol..you cant go no where, the government always watching

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Posted (edited)

Well nothing that will change my mind but its still a good article.

By nothing changeable i mean, if you still have to pay taxes or declare finnancial achievements / profits you will eventually lose your privacy :D

Edit: you need always to send to some bank or real life place so you can get your fiat.

Edited by DreamStage

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hello friends its purely public anyone can view your transaction through your wallet id,whether your wallet  id change every transactions but someone try to view your transaction  they can.nothing  anonymous here.when you paste or type your wallet its stored somewhere.

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Thanks so much for the information Lilly, i never really exchange my bitcoin, so i doubt anyone can find find me.

This information really helped thanks again!

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I knew about this before when my coinbase account was deactivated somehow for no reason and it seemed like it was because i was depositing in stake.

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Nice article lilly.  The analogy I always use is the numbered Swiss bank account.  People can track to your number so be aware of that.  As you note, as long as you use a different address, e.g. number, you have pretty solid anonymity.  I've found the Swiss bank account analogy very helpful in explaining Bitcoin to older people. 

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Thank you so much for this post.  Very useful and text is quite clean to understand.  I Guess that, main strength of blockchain is about decentralized operations, then we come across with being anonymous which as you write, is not that certain.  Wallet addresses should be change quite often, and in many cases the wallet advise that is better to do so when receiving depos.  I think this is one of the best post I have read so far.  Thank You.  Good luck.

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I never thought of a private bitcoin transaction, because I often search for a bitcoin shipping address to check where it came from and how many were sent. but even though all the transactions were seen by everyone but very safe because very rarely a wallet can be hacked by a hacker without having access to the wallet. the thing that hackers can do is just do a phishing to cheat in order to succeed in getting a user and password to log in to a new wallet can take all bitcoin.
I think only that method can be done by a hacker.

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Posted (edited)
19 hours ago, Lillyflow said:

In the post below I will share a cool article that I wrote a couple months ago. 

The reason I am sharing it again is because @williamshennie9 and @bmg inspired me with their conversation

in another thread here in the Stake Forum which you can check out at this link :  

My orginals here and linked below/  

https://www.linkedin.com/pulse/so-you-thought-bitcoin-transactions-were-private-lori-brown/

 

https://steemit.com/bitcoin/@lorilikes/so-you-thought-bitcoin-transactions-were-private-a-realistic-view-of-a-flawed-public-understanding-plus-a-recommendation-that

 

 

And for those who are lazy, here it is in full form. 

So You Thought Bitcoin Transactions Were Private.

Published on January 20, 201

Lori Brown

Professional Writer | Journalist | Authentic Human | Spiritual Student of Life | G... See more

27 articles

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 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

A note to the cranky Veterans of "old school" crypto: We were all newbies once. Even you! So stop trolling, and help them learn!

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:

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.

 

This comes directly from the Bitcoin development 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. Check out  alt coins with improved privacy coin to add to your "hodlings."

I guess! you have now opened the pandora box. I never knew that 😃😄😁, your post led me to think once again am I safe, am I anoymous, can my wallet address be traced?  

Oh my God!!! Why did some geek in his dirty room invented Dash coin ???

Guess what!!! It was meant to make you completely anyomous, when doing a transaction 😀😁

 

 

Edited by cointikka

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Hi Lori and thanks for an article. I always thought my transactions were anonymous, but damn you opened my eyes to the truth. I thought I was protected, but it turned out that I was accessible to all. In any case, I have nothing to hide. But it’s still unpleasant when all your operations are publicly available.

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oh yea there are companies out there which is their prime businiess, to track where other transactions came from, its usually for exchanges and stuff like that ... the servicesoffered... 

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Thanks for the wonderful knowledge about this issue regarding and the truth about the privacy of our Bitcoin transactions. It definitely sheds some new light to me and I know much better now. :o

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thx for the very useful article Lilly. I personally do not really care wether it is anonymous or not. However there are a couple addresses I have I rather do not want anyone to know how much crypto they contain. So I only use them for business purposes with a btc fiat exchange I am closely working with. I will never use this addresses to send amounts to other persons. 

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Posted (edited)
22 hours ago, Shaniqua said:

oh yea there are companies out there which is their prime businiess, to track where other transactions came from, its usually for exchanges and stuff like that ... the servicesoffered... 

Take for example Coinbase, you need to provide some KYC information to send your own money and provide business taxes and informations.

If they dont comply with european laws they wouldnt be able to be on top of the market exchanges ;)

Edited by DreamStage

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