Over the last few years, Bitcoin has earned a reputation for itself as one of the most commonly used forms of currency when it comes to making anonymous transactions online. After all, online privacy is something that many people are becoming increasingly concerned about, and so Bitcoin has pretty much stolen the limelight in terms of offering a method of payment that supposedly cannot be linked back to you.
But, does it really live up to the hype in terms of offering enhanced privacy? Find out the answer to that very question and a whole lot more in the following article as we take a closer look into exactly what Bitcoin is all about and whether it is as secure as it is made out to be. Here’s everything that you need to know.
What is Bitcoin?
You may or may not have heard of Bitcoin before – you’ll either be totally clued up on it, or perhaps you’ve heard the term floating about in conversation or online. For those who aren’t aware of what Bitcoin is, it can be described as a form of online currency that can be used to make purchases for goods and services online.
Bitcoin is one of many forms of digital currency that can be easily traded online. So, if you’re looking to buy or sell some of this currency, you should be able to do so without too much hassle if you have decent technical knowledge. However, it is important to know that Bitcoin works in a different way to how you would usually make transactions or exchange money, which means that you’ll need to do your research before you get started. That way, you can hopefully avoid getting into financial trouble by having the correct knowledge of the risks involved beforehand.
Speaking of risks, you should know that the price of Bitcoin is extremely volatile and has been known to fluctuate massively. At the time of writing, 1 Bitcoin is worth around $5,700, whereas it was worth almost $20,000 back in December 2017. This is a marker of how the price can change massively in a relatively short space of time. So, if you’re looking to invest in Bitcoin, it’s clear to see that you need to be aware of the fact you either have a whole lot to gain, or a whole lot to lose.
Now that we’ve given you a brief overview of Bitcoin and what it is all about, you might just be wondering whether it is anonymous as many people claim it to be. Thankfully, the next section will cover exactly that, as we delve deeper into how untraceable Bitcoin is.
Is Bitcoin Totally Anonymous?
Put simply, Bitcoin doesn’t offer as much anonymity as some might have you believe. Many people automatically assume that Bitcoin is completely anonymous when using it as a form of payment for goods and services online. But, those who believe this to be true could potentially leave themselves wide open to having their identity revealed. This is because contrary to popular belief, it is pseudonymous, which means that your IP address could potentially be linked with your physical address in certain circumstances.
The problem starts when your personal information is required by intermediary companies such as Coinbase which ask you to provide data in order to comply with know-your-customer (KYC) and anti-money laundering (AML) laws. Essentially, this means that companies which offer services such as currency exchanges could potentially be hacked. In the event this happens, your bitcoins could potentially be stolen, or perhaps your information will be leaked to a third-party.
With all this being said, it’s not all doom and gloom when it comes to using Bitcoin. This is because it does actually offer a certain level of protection in many of its components. For example, using it directly doesn’t require the use of personal data, which makes it completely safe in that regard. Just take care when you use it on services such as the aforementioned Coinbase.
Bitcoin – Ensuring Optimal Privacy
For the reasons covered in the previous section, it is important to remember that you should always adopt good practices in order to avert a potential disaster. In other words, you shouldn’t just automatically come to the conclusion that Bitcoin alone is enough to protect you when paying for goods and services or trading currency online.
By taking the necessary precautions, you will be able to safely use Bitcoin as an online payment method without having to worry about your privacy being breached. To put things into perspective, it would be appropriate to suggest that you should probably treat your Bitcoin wallet just like you would your physical wallet. By doing just that, you can rest assured that you’ll have done pretty much everything in your power to keep your personal information well away from any prying eyes.
If you are looking to go the extra mile in ensuring your online privacy, using a VPN will most definitely go a long way. Other methods that you can utilise is the anonymous Tor browser, which is a secure browser that protects you as you browse the web.
Making use of internet security/anti-virus software as another form of online protection is also recommended. This will allow you to prevent your system being infected by various forms of malware, viruses, and ransomware which includes such things as cryptojacking – a process whereby your system is used to illegally mine cryptocurrency.
Overall, it’s safe to say that Bitcoin isn’t quite as anonymous as it is often made out to be. After all, it has been proven that there are many ways in which an encrypted transaction can be linked with an individual, as we have covered in this article. Because of this, you will need to take the appropriate measures in order to prevent this from occurring.
To summarise, it would be appropriate to suggest that by following the tips that we mentioned earlier, you will now be aware of exactly what it takes to protect yourself when browsing the web and using payment methods such as Bitcoin.