Bitcoin is often perceived as an anonymous for of electronic cash, even though it functions very differently, Understanding the key difference between pseudonymity, privacy, and anonymity is crucial.
How Bitcoin Really Works
The majority of Bitcoin users are people who, for reasons of privacy or simply out of curiosity, observe the principles of privacy and anonymity in their financial transactions. But the paradox of the cryptocurrency is that its associated data creates a forensic trail that can suddenly make your entire financial history public
In fact, the cryptocurrency created by Satoshi Nakamoto and launched in 2009 was never the completely untraceable payment system that naïve criminals thought it was. Bitcoin works by recording transactions on a public register known as the blockchain, an unforgettable accounting file that is constantly replicated and distributed to thousands of computers running the Bitcoin software.
In practice, Bitcoin is anonymous, but rather pseudonymous, and its pseudonyms are cracked in case of database leaks or hacks of permanent Bitcoin services and exchanges, many of which increasingly require proof of a user’s identity. Established Bitcoin exchanges have all begun introducing authentication rules for people trading in the currency. By tying users’ names to their Bitcoin addresses, the blockchain can be tracked to learn details of where Bitcoin ends up.
The rules, which do not apply to people trading in Bitcoin only, require people to verify their identity. Such requirements may not yet exist for native Bitcoin users, but the issue of privacy has been highlighted.
Finding Solutions to Achieve Privacy
Addressing the elephant in the room is only part of the solution. There is ample evidence confirming how Bitcoin lacks privacy and anonymity. The only way to achieve this goal is by relying on specific service providers, often referred to as Bitcoin mixers. The service provided by BitcoinMix is a good example. It provides the layer of privacy that Bitcoin users have been looking for through an automated process.
Shuffling BTC is a great way to remove the precious “history” of account transfers. Users will receive “fresh” bitcoins with no visible trace attached to them. Avoiding people from tracing back a BTC balance to oneself is crucial to those who genuinely value privacy above everything else.
In exchange for a random commission of 2-5% per transaction, users can achieve complete peace of mind. BitcoinMix.org doesn’t store any logs, increasing the overall privacy and anonymity of platform users. Furthermore, no personal data or email information is collected or recorded during transactions. Combined with the automated mixing service, BitcoinMix is a bastion of privacy for Bitcoin users.
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Leading global blockchain news provider. A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography.