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I remember when my friends wanted to order some ecstasy off Silk Road. We were ravers, and we were also flat broke. It was also in 2012, back when the concept of buying anything off the Dark Web was primarily taboo.
Word had it that the Dark Web marketplace had ecstasy that was way cheaper than what our regular dealers would offer us. It was tempting, but we were nervous. I was very hesitant to work this system; I just didn't trust it.
"Don't worry, I heard that Bitcoin is completely anonymous. It's like, totally untraceable. Even the government can't figure it out," said one of my friends.
Something in my gut told me otherwise. Not too long after, Silk Road became the target of federal investigators and we ended up dodging a major bullet.
Even today, something about that memory nagged at me. I decided to figure out what was the deal. Is Bitcoin anonymous, really?
Back in the day, there was a time when Bitcoin transactions were almost entirely untraceable.
Bitcoin is a cryptocurrency that is traded using decentralized networks and totally algorithm-based data. In plain English, that means that you don't really need to give any identifying details in order to start a Bitcoin transaction.
The buyer and the seller don't have to have their names attached to anything in order to make it happen. They don't need to have a bank account, nor do they have to get into details about what they're transacting.
In the world of digital transactions, that's very different from something like PayPal or Venmo. Moreover, the complex algorithm that goes into Bitcoin payments made it hard for anyone to track.
To an average user, you don't need to ask, "Is Bitcoin anonymous?"
You're safe, for the most part. Most transactions can't really be traced because of the complexity of the code. This is doubly true when it comes to Dark Web transactions.
Bitcoin is as close to anonymous as digital currency can get. However, that doesn't mean that Bitcoin is entirely anonymous...
It's worth pointing out that nothing is truly anonymous on the net.
Most people will tell you that Bitcoin is anonymous, but there's only so much truth to that statement. It is possible to track Bitcoin transactions and link them to people.
Cryptocurrencies are pseudonymous. In other words, it's a lot like trading currencies under pseudonyms. You can still piece together clues around the transaction to determine who made it if you really want to.
Even so, Bitcoin still gets called "untraceable" and "anonymous."
When Bitcoin was first invented, it was as close to anonymous as it ever was going to come.
Even then though, Satoshi Nakamoto advised users (in his original white papers) to change their address every time they used Bitcoin for a transaction. He or she, because the jury is still out on who Satoshi Nakamoto is, claimed that this was to avoid tying a single transaction to a single owner.
This means that Satoshi Nakamoto even knew that Bitcoin wasn't totally anonymous. You really have to be careful if you're doing something illicit online with this coin!
It's worth pointing out that programming is always getting better.
If you still think that you can do anything with Bitcoin transactions, think again. How is Bitcoin anonymous when technology that traces Dark Net activity continues to get better?
Hackers are now working to find a way to trace Bitcoin transactions, and hopefully better tie them to individual people. Whether or not they will succeed fully in their endeavors remains to be seen, but they have been making serious leeway.
Experts at Cambridge University recently uncovered a way to trace stolen Bitcoins.
Bitcoin theft has been a major issue when it comes to the cryptocurrency world. Millions of dollars have been stolen by hackers, all of which were in the form of Bitcoin and other digital currencies.
A new study at Cambridge uncovered a 200-year-old method that could potentially be used to mark stolen coins. With a little work, you might be able to find out who stole them.
Edward Snowden's leaks also show that Bitcoin's users are extensively tracked by the NSA.
If you thought the government wouldn't be able to figure out who was buying those goodies from Silk Road, think again. A leak from Snowden proved that the NSA had been tracing Bitcoin transactions fairly extensively.
If this is true, then you can bet your bottom dollar that law enforcement will be able to link you to criminal activity—if you've been using Bitcoin for it. This explains how Mueller knew that Bitcoin ended up playing a role in Russian meddling, doesn't it?
You don't need to be a part of the NSA to be able to trace Bitcoin transactions.
Most cryptocurrency wallets will have you link your bank account to the app in order for them to work. This means that people could easily trace which Bitcoin transactions you did, just by looking inside the app.
Some companies are tracking Bitcoin transactions as part of their main function. So, it's not just a government thing.
If you think about things that way, Bitcoin really isn't anonymous at all. That said, it's still harder to trace than many other forms of currency. That gives you a little peace of mind, right?
People have been arrested because of Bitcoin transactions before.
Most of the time, the reason that people think of Bitcoin as untraceable is because you don't really hear about news articles involving people getting arrested over what they spent Bitcoins on. Trust me though, busts do happen.
One group of people at Forbes went out to buy drugs on Silk Road back when it was still around. Everyone associated with it got caught, making headlines as proof that the cryptocurrency isn't anonymous. If people can trace your IP address on Silk Road, you can bet they can trace the transaction.
So is Bitcoin anonymous?
No, not it is not. The Bitcoin network was never fully anonymous to begin with, which is why so many people emphasize using good practices when purchasing the things that Bitcoin has bought already. It's also getting less anonymous as time goes by. So, be careful what you buy online, okay?