Bitcoin isn’t anonymous. It’s pseudo-anonymous
There are many misconceptions about Bitcoin, and the worst one is its anonymity.
Remember that time when you were younger, and you did this clever thing? And no one knew what was going on but you? You were so bright, and everyone fell for your deception. It’s funny to think about it now except for the fact it didn’t happen. You weren’t clever, and everyone knew exactly what you were up to. Hell, they even snickered at you a couple of times to let you know they knew, but you didn’t get it. You swore up and down you knew something no one else did, and they were dumb for not knowing, but, in the end, it was you who didn’t know.
That’s the way it is with Bitcoin anonymity. Except it’s worse. Everyone believes they know that Bitcoin is anonymous and thus rife with criminal activity, but they’re 100% wrong.
When you’re done reading, you’ll know why Bitcoin is not anonymous at all but pseudo-anonymous, what makes it more transparent than people realize, and how to end the discussion that it’s the perfect coin for criminals.
Let’s get it.
What’s the misconception about Bitcoin’s anonymity?
The problem with many people’s understanding is that law enforcement can’t tie an investor’s Bitcoin wallet address to the investor. While the wallet address carries no information about who holds it, the institution providing the wallet does. For example, an exchange like Uphold requires KYC (know your client) verification to sign up for their services, including hot wallets and exchange access. And although it isn’t the law for crypto yet, almost all crypto exchanges are doing it to get ahead of the curve. Also, it’s sensible business. Exchanges using KYC verification require you to present a valid photo ID before account creation. Therefore, through the service provider, law enforcement can tie you to your crypto address. So, while not a direct tie, a tie exists, and it always will. Bitcoin is pseudo-anonymous.
What are the parts that make Bitcoin transparent?
Bitcoin’s blockchain is the perfect record-keeper for all transactions made on it. Hell, you can go to a website and look at them for yourself. However, there’s more to it than a few clicks to determine what transaction happened and when. You need analysis of traffic, block creation times and awards, and tying all that data with real-world activity. That’s where law enforcement deploys blockchain analysts to correlate data and determine possible causation. Yet, none of that matters if law enforcement can’t obtain information from exchanges.
Most crypto exchanges require KYC to open an account. Law enforcement agencies can approach a district judge with substantive evidence to convince them to issue a seizure warrant in America. Once law-enforcement agents obtain the warrant, they can come to the exchange with enough legal backing to ask that they allow law enforcement to access an account under suspicion. Of course, that all relies on the laws of the land, and not all seizure processes are the same.
If it isn’t anonymous, why do so many complain about its criminal ties?
Short answer: ignorance. Most of these calls for shutting down Bitcoin and crypto in general stem from two things: politician’s tremendous capacity for ignorance and Wall Streets’ determination to control or destroy Bitcoin and crypto.
Politicians are so disconnected from the society they govern and limited in their intelligence that it’s embarrassing. For example, Former Senator Ted Stevens called the internet “a series of tubes” when opposing an amendment to a committee bill in 2006. Another case, and my personal favorite, is Rep. Hank Johnson (D-Ga.) showed concern during a House Armed Services Committee meeting in 2010 that a buildup of troops on the U.S. territory of Guam could “tip the island over.” You can’t make this up. Therefore, if our congresspersons can’t use basic logic or be bothered to do an ounce of research, it shouldn’t surprise us they believe everything they see on the internet. And that includes criminals solely using Bitcoin for nefarious activities. Unfortunately, however, we don’t only face ignorance on one front but greed on another.
Wall Street wants crypto in its control or out of the picture. But, unfortunately, too many colossal banking and investment titans have rallied against Bitcoin, and their ties to Wall Street are apparent. Hell, some of them can manipulate the market by speaking a sentence. In the article below, I covered how Wall Street implemented price controls on Bitcoin to short it.
Wall Street and Bitcoin: Are They Using Old Tricks to Force a New Big Short?
Wall Street isn’t known for their altruism or their love for Bitcoin, so what if they wanted to take control of BTC —…
It’s the same play they made with gold a long time ago, with the exception they don’t control all of Bitcoin — yet. So, therefore, Wall Street will keep on banging the gong, warning all of us of the coin’s volatility and criminal underpinnings (which I find hilarious). All while their political puppets raise the alarm for regulation and reform to clamp down on those mean crooks protecting us vulnerable citizens. What extraordinary heroes (insert floodgate of sarcasm).
Most people believe that no one can tie a Bitcoin’s wallet address to the owner. However, the connection lies with the person who set up the exchange account. Exchanges are the connection between the wallet and the user. Yet, to make that connection, legally, law enforcement agencies must comply with proper procedures to obtain access to the account on the exchange. The process for access accounts isn’t the same everywhere, so while there might be a few places the law cannot connect you, they are so few. Therefore, Bitcoin isn’t completely anonymous. So, for those who think you can pull off some clever plans with their BTC account, don’t be stupid.
Speaking of stupid, with the government perpetuating its ignorance across the country and the globe, people will continue to believe Bitcoin is a currency for underground crimelords. All while the real crimelords on Wall Street attempt to take control or eradicate Bitcoin.
The moral of the story is if you know someone who believes Bitcoin is entirely anonymous, educate them. Then, let’s work to bring some truth about Bitcoin to the world instead of the misinformation and panic those in power love to promote.
Did you believe your Bitcoin holdings were anonymous?
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