Cryptocurrency promises to offer complete anonymity, which is achieved by listing random electronic wallet addresses while the transactions listed on the blockchain are accessible by the public.
On the surface, this might seem secure, but blockchain’s anonymity is not faultless. In reality, a more accurate description would say crypto offers pseudo-anonymity, much like writing a book under a pen name.
Here’s how to ensure your crypto transactions remain anonymous
Users can preserve their privacy on the blockchain if their address is not linked to them. However, if anyone can link the user information to them, their information becomes public. The information includes their entire transaction history, Crypto net worth, and other wallets.
The risk of exposing one’s identity has increased since many merchants are now accepting crypto payments. A leading culprit of exposing crypto users are cookies and web trackers. These are tiny pieces of code placed into websites that share information about how the site is used with third parties. Most cookies send out browsing and usage habits, but some may send personally identifiable information like email addresses and clients names.
The information can easily be used by hackers, governments and law enforcement agencies to link specific crypto transactions to users who might have entered details like phone numbers, name and address into the website in the past, quickly revealing their identity.
Additionally, cryptocurrencies are peer to peer networks which makes it possible to analyse transactions and log the IP addresses of senders and receivers of cryptocurrencies.
Tracking down the owner of a crypto wallet is not an easy task, but it can happen if one does not exercise caution.
Why You Need To Care
Law-abiding citizens may not be worried about the lack of proper blockchain privacy because as long as they pay their taxes, they are not likely to be bothered by law enforcement agencies.
Unfortunately, it is not just the government agencies that users need to worry about; Crypto whales can attempt to target users for criminal purposes, which has happened in the past.
An example is a small merchant that is finally accepting crypto, and they advertise their wallet address so that their clients can send payments. This move makes it easy to associate the crypto address with the business owner. A criminal can easily do a quick search on the blockchain and see the wallet’s balance, and if it is loaded, they may be targeted by the criminals.
Ways To Maintain Blockchain Privacy
Luckily, there are several ways through which people can improve their crypto anonymity, ensuring that their wallet addresses can never be linked back to their real identities.
One of the most popular ways to guarantee crypto privacy is to use a coin mixing platform such as Samurai Whirlpool. Crypto mixing platforms use smart contracts to integrate multiple transactions making it impossible to trace the two wallets involved. They do this by creating interim addresses and moving the coins across multiple wallets or swapping the coins with different addresses by mixing transactions with the same value. The strategy is known as crypto washing or crypto laundering. The technique makes it almost impossible for hackers to track the sending and receiving wallet. However, mixing isn’t perfect. Most such services only support Bitcoin, and they charge significantly high fees for using the mixing service.
Another alternative to ensure crypto privacy is to only ever deal in cash and in-person without revealing your true identity. Services such as Localcryptos.com allow individuals to arrange crypto transactions in-person without requiring those involved to prove their identity when signing up.
To remain completely anonymous, you must always use a VPN or the Tor browser when accessing Localcryptos. You should also register with a burner email like Protonmail or Guerrilla Mail. Find a trusted seller or buyer on Localcryptos by checking the feedback given about each user. Only deal with users who have a solid reputation. As for the physical meeting, ensure it is conducted in a public place where you can access free public Wi-Fi. Furthermore, you should never use a personal vehicle to travel to the meeting spot, as the license plate number could quickly reveal your identity.
If all the above sounds like too much of a hassle, a third option involves using a crypto privacy wallet such as BlockWallet. It is a Chrome browser extension available to anyone who uses the browser. It masks transactions using privacy pools built on smart contracts to combine multiple users’ funds into a single fund. BlockWallet generates a new address containing the requested currency amounts every time someone withdraws funds. Each transfer is executed within the privacy pool to keep each withdrawal anonymous and untraceable.
BlockWallet supports Ethereum and any ERC20 token; hence, it supports many different cryptos and DeFi apps. The only real downside to BlockWallet is its 0.25% fee on all withdrawals. However, many will agree that it is a small price to pay for the unmatched privacy it offers.