Protect Your Privacy
Bitcoin is often presented as a confidential payment system. But in reality, Bitcoin, as well as Ether and other cryptocurrencies, is perhaps the most transparent payment system in the world. At the same time, Bitcoin can provide acceptable levels of privacy if used correctly. Always remember that it is your responsibility to use best practices to protect your privacy.
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Understanding Cryptocurrency Transparency
Cryptocurrencies operate with an unprecedented level of openness that most people are simply not accustomed to. All Bitcoin transactions are public, traceable, and permanently stored on the blockchain network. Crypto addresses are the only information used to determine where bitcoins are and where they are sent. These addresses are privately generated by each user’s wallet. However, once addresses are used, they become linked to the history of all transactions in which they have participated. Everyone can see the balance and all transactions of any addresses. Since users usually have to reveal their identity to receive goods or services, crypto addresses cannot be completely confidential. Therefore, it is recommended to use crypto addresses only once, and users should be careful not to disclose their addresses.
Use New Addresses for Receiving Payments
To protect your confidentiality, you should use a new crypto address each time you receive a payment. Additionally, you can use multiple wallets for different purposes. This way, you isolate your transactions so that no one can link them together. People who send you money will not be able to see which wallets you own or what you do with them. Always keep this in mind, as it is very important.
Be Careful in Public Places
Unless you intend to receive public donations or payments with full transparency, displaying your Bitcoin address in a public place, such as a web page or social network, is not a good idea in terms of privacy. If you choose to do so, always remember that if you move any funds from that address to another one you own, it will be publicly recorded in the history of your public address. Additionally, you may not want to publish information about your transactions and purchases that could allow anyone to determine your crypto addresses.
Your IP Address Can Be Logged
Since Bitcoin is a decentralized network, it is possible to monitor transaction relays and log their IP addresses. Full node clients broadcast all transactions of other users along with their own. This means that finding the source of any particular transaction can be complex, and any Bitcoin node can mistakenly be identified as the source of a transaction, even if it is not. You can hide your computer's IP address using a tool like Tor, so it cannot be tracked.
Limitations of Mixers
Some online services, known as crypto mixers or tumblers, offer to reduce traceability by swapping identical amounts between different users with independent addresses. It is important to note that the legality of using such services can vary and be subject to different laws in different countries. These services also assume that you trust the people who run them not to lose or steal your money and not to keep records of your requests. Even if these services can prevent traceability for small amounts, it becomes increasingly difficult to do so as transaction sizes grow.
