Are crypto transactions more transparent than bank transfers?
The cryptocurrency promises to offer complete anonymity, which is achieved by listing random e-wallet addresses while transactions listed on the blockchain are publicly available.
At first glance, this may seem safe, but the anonymity of the blockchain is not beyond reproach. In fact, a more accurate description would say that crypto offers pseudo-anonymity, much like writing a book under a pen name.
Here’s How to Make Sure Your Crypto Transactions Remain Anonymous
Users can maintain their privacy on the blockchain if their address is not linked to them. However, if someone can link the user’s information to them, their information becomes public. The information includes their complete transaction history, Crypto net worth and other wallets.
The risk of exposing one’s identity has increased since many merchants now accept crypto payments. The main culprits of crypto user exposure are cookies and web trackers. These are tiny pieces of code placed in websites that share information about how the site is used with third parties. Most cookies send browsing and usage patterns, but some can send personally identifiable information such as email addresses and customer names.
The information can easily be used by hackers, governments and law enforcement agencies to link specific crypto transactions to users who may have entered details such as phone numbers, names and addresses on the website in the past, quickly revealing their identities.
In addition, cryptocurrencies are peer to peer networks that allow transactions to be analyzed and the IP addresses of senders and recipients of cryptocurrencies to be recorded.
Tracing the owner of a crypto wallet is not an easy task, but it can happen if one is not careful.
Why You Should Care
Law-abiding citizens may not worry about blockchain’s lack of privacy, because as long as they pay their taxes, they likely won’t be bothered by law enforcement.
Unfortunately, it’s not just government agencies that users have to worry about; Crypto whales may attempt to target users for criminal purposes, which has happened in the past.
An example is a small merchant finally accepting crypto, and they advertise their wallet address so their customers can send payments. This decision makes it easier to associate the crypto address with the business owner. A criminal can easily do a quick search on the blockchain and see the wallet balance, and if it is loaded, it can be targeted by criminals.
Ways to Maintain Blockchain Privacy
Fortunately, people can improve their crypto-anonymity in several ways, ensuring that their wallet addresses can never be linked to their true identity.
One of the most popular ways to ensure crypto privacy is through 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 intermediate addresses and moving the coins across multiple wallets or swapping the coins with different addresses by mixing transactions of the same value. The strategy is known as crypto-washing or crypto-laundering. This technique makes it almost impossible for hackers to track the sending and receiving wallet. However, the mix is not perfect. Most of these services only support Bitcoin and charge very high fees for using the mixer service.
Another alternative to ensure crypto privacy is to deal only in cash and in person without revealing your true identity. Services such as Localcryptos.com allow individuals to arrange in-person crypto transactions without requiring those involved to prove their identity upon registration.
To remain completely anonymous, you should always use a VPN or the Tor browser when accessing Localcryptos. You also need to sign up with an email burner like Protonmail or Guerrilla Mail. Find a trusted seller or buyer on Localcryptos by checking the reviews given on each user. Only deal with users who have a solid reputation. As for the physical meeting, make sure it takes place in a public place where you can access free public Wi-Fi. Also, you should never use a personal vehicle to get to the meeting place, as the license plate number could quickly reveal your identity.
If all of the above seems too complicated, a third option is to use a crypto privacy wallet such as BlockWallet. It is a Chrome browser extension available to anyone who uses the browser. It hides transactions using privacy pools built on smart contracts to combine funds from multiple users into a single fund. BlockWallet generates a new address containing the requested currency amounts each time someone withdraws funds. Every transfer is executed in the privacy pool to keep every withdrawal anonymous and untraceable.
BlockWallet supports Ethereum and any ERC20 token; therefore, it supports many different crypto and DeFi applications. The only real downside to BlockWallet is its 0.25% commission on all withdrawals. However, many would agree that it’s a small price to pay for the unparalleled privacy it offers.