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Bitcoin transactions are pseudo-anonymous. What can an individual that uses Bitcoin do in order to remain as anonymous as possible?
How can one remain relatively anonymous while using Bitcoin?
Answers
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- Don't publicly disclose any address in your wallet, or associate any address with your true identity.
- Use currency exchanges to break the 'money trail' of bitcoin addresses associated with you.*
- Use anonymizing services such as TOR when conducting business.
- Break up your transactions between online and offline (person to person) transactions.
- Buy bitcoins for cash.
- Mine bitcoins yourself either directly (solo), or with pools such as Eligius that do not require registration.
*If you transfer bitcoins into a large currency exchange or other large private repository of bitcoins, then pay bitcoin back out to a new address that is not associated with you it is difficult (without a warrant) to track the bitcoins.
3"without a warrant" are the very important keywords here. – David Perry – 2011-09-02T15:43:27.357
Can you add purchase with cash / mine (see @David Perry's comment on my answer)? I'd like to accept your answer, and I want it to have all the info. See also Stephan's answer. – ripper234 – 2011-09-02T17:04:17.680
Thanks. Not sure how to incorporate Stephen's answer science it doesn't, in itself, improve anonymity. Plus I see no reason to usurp his answer. – Joshua Kolden – 2011-09-02T17:17:44.693
Re: David Perry's edit, I'm not sure that we can assert what data Elegies retains. That's way I phrased it the way I did. – Joshua Kolden – 2011-09-02T18:36:29.837
How do you do #1 and actually use bitcoins at the same time? I mean: As soon as I want someone to give me money or if I want to buy something I have to use at least one of my wallets, right? – Nikodemus RIP – 2012-09-09T00:35:52.877
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- Use Tor whenever connecting to the Bitcoin network or to exchange sites.
- Never publish one of your Bitcoin address publically (e.g. in a signature or blog). If you do, and someone actually sends money to this address, you run the risk of them being able to identify your other addresses and monitoring every transaction your make via Block Explorer.
- Any Bitcoins that you want to keep truely anonymous should be managed via a dedicated account, and never linked on the internet to your name. E.g. if you buy some Bitcoin through Mt. Gox, this can theoretically be traced to you by law enforcement agencies if they can correlate the money transfer you made to Mt. Gox with the funds transfer (assuming they get access to Mt. Gox logs).
A simple way to remain truly anonymous is buying bitcoin in exchange for cash (e.g. through Local Bitcoins) and moving them to an address you will only access through Tor.
2In addition to purchasing in cash you can mine (through TOR) at a pool like Eligius that keeps no information other than a Bitcoin address and an IP address. – David Perry – 2011-09-02T15:45:22.253
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There is a patch that can be used to let you specify specifically which addresses to use for spending in a transaction. - http://github.com/bitcoin/bitcoin/pull/415
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Download the Tor package with vidalia from http://www.torproject.org/
Run Tor... When it is working, a green onion means your entire network traffic is being anonymized.
Details on how Tor works are at: http://en.wikipedia.org/wiki/Tor_(anonymity_network)
Install it... and then in your bitcoin application, under settings, tell it to use a proxy.
The default setting is the correct one. You could probably disable the option that starts Bitcoin when your computer starts, because you want Tor up and running before Bitcoin.
All of your transactions are recorded in the block chain... mix things up by using available tumblers. Also... the anonymous markets are displaying text saying they now use tumblers to make tracing where transactions come from and go difficult to analyze/trace.
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Tor and proxies are a good thing, as it obscures which IP address that is broadcasting your transaction. But the best way of making an anonymous transaction is to trade you Bitcoins into a different currency which have anonymity built in as a feature, which currently only are Monero and Dash. Then if you are able to use either of these for you purchase or other usage, then it would be easy enough to just stay with these, but otherwise its just transferring the other currency back into Bitcoin before usage (and make sure its a new unused btc address). With Monero this would look like:
BTC (1) -> Monero (1) --anon_send--> Monero (2) -> BTC(2)
See also http://bitcoin.stackexchange.com/questions/9594/how-can-one-remain-relatively-anonymous-while-using-ripple
– ripper234 – 2013-04-11T16:10:20.9276Get behind like 8 proxies at a public library and wear a tin foil hat! Or Tor – Alex Waters – 2011-09-02T14:46:12.033
1A public library probably has CCTV so best to avoid that – Gary Rowe – 2011-09-02T14:55:40.383
2@Alex Waters I don't think that fully addresses the threat model. The problem with Bitcoin anonymity is not that someone would trace your transaction to your IP (though that is also a possibility). A bigger problem is that someone might learn that some addresses are under your control, then link you to other transactions. This can be done without knowing anything about which computers or geographic location you made the transactions from. – mgiuca – 2011-09-03T05:34:00.970