Privacy Guide to Protect Your Bitcoin
Bitcoin is becoming a thing. If you are new to it, or new to its essentials, you might want to check out some of the ways to protect your privacy as they relate to this asset.
Like in real life, our Bitcoin wallets must be secured especially as this largest cryptocurrency by market capitalization is a notch higher than most recent technological discoveries to offer us a great feature that enables you and I to be our own banks.
Being in total control of my funds means there is information that I would not like to see exposed to an unauthorised person or entity for fear of my money being stolen or my data being cultivated for whatever purpose e.g. affect and change my way of life. At the same time, I recognise that the freedom the cryptocurrency brings as a financial system comes with added responsibilities for which I need to protect my privacy.
Truly, I believe that having to store and transact (send and receive) my funds all by myself without a third party should place a somewhat (light) burden on me as a Bitcoin wallet owner. It is helping to instill the need to be financially-educated and a sense of discipline in me with regards to privacy and identity issues which tend to be overlooked in the legacy financial system.
The creation of a Bitcoin wallet is easy, fast and cost less from the comfort of my home. In some cases, unlike with bank accounts, credit cards and payment services like PayPal, Bitcoin might also not be tied to my identity.
I should emphasize that achieving complete anonymity with Bitcoin is tough, though, considering that its transactions are transparent. The history of every account balance in a Bitcoin wallet is public since all addresses and transactions on the network are recorded on the blockchain, its distributed database.
Even when it does not reveal my name, my contact details or even my location as the account owner, there are ways this information could be retrieved unless I act on it by providing a level of protection.
Tracing my Bitcoin back to me
Yes, it’s true: Bitcoin is traceable on the blockchain and in different ways. They include:
The mixing service — The process whereby a certain amount of Bitcoin is sent back and forth to mix its traceability which could have been popular to cover transaction traces but has not been proven reliable. It requires greater trust among parties involved and is not recommended for use with large transactions.
Address trace — Whereas, the publicly-visible address of either the sender or the receiver could be trailed by those who care to know as well as know how to go about it.
Mail order — If you make any purchase online and the delivery of the item(s) bought is to your mailing address, then no one needs to sweat to locate you. It’s quite easy.
Source of Bitcoin — Before even placing an order, what about being tracked from where you sourced your Bitcoin? Hardly could you buy Bitcoin from any of the main cryptocurrency exchanges today without going through some form of identity verification — except for decentralized exchanges e.g Bisq which have low liquidity — as part of their AML/KYC process which was intended to deter criminals from using cryptocurrencies.. Some Bitcoin ATMs now require your ID too before approving a purchase. Governments can request for your personal information from these entities.
IP address trace — It is also possible for some of your transactions to the Bitcoin network to be matched to your IP address.
Acting on your privacy to protect your Bitcoin
Privacy is not necessarily secrecy but the power to choose what you want others to know about you. Having your privacy in the case of Bitcoin is crucial as the cryptocurrency has been touted several times as being used more for criminal activities. Without privacy, your transacted Bitcoin may interact with a criminal’s and it could lead back to you in adverse ways. My suggestions?
Watch what you share online — One of the simple tricks you can use to avoid being traced to your wallet is for you to be mindful of the data you submit online (e.g. telling people how much Bitcoin you own or posting your addresses publicly) and which information such produces that could be used to identify you.
Wallet choice — While it is important to carefully choose secure wallets where you store funds — especially online — to avoid security breaches, it is also wise to try generating new wallet addresses so as not to keep re-using the same address for multiple transactions. To use multiple wallets for different purposes is to isolate each transaction from being associated with them all together.
Use pseudonyms — Unlike in the traditional financial system where banks and the likes of PayPal require your real identity which makes it difficult for some people to stay anonymous (and detrimental in some cases), Bitcoin allows the use of a pseudonym to protect your privacy against rejection, lifestyle influences and other societal problems that prevent you from being who you really are.
Browse anonymously — To go another level is to seek ways to use the internet anonymously. You can start by using HTTPS Everywhere which ensures that the traffic between you and the site you are visiting is encrypted whether or not you’re connected to a VPN. Developed by the Electronic Frontier Foundation (EFF), it also seeks to ensure that you visit the exact site that you intended to connect to — though it’s been argued that it still allows some vulnerabilities.
You can also use a VPN to conceal the IP address attached to your Bitcoin account thus making your identification as the owner of a transaction impossible. The VPN service helps create an encrypted channel that will route all the traffic between your device and the internet such that the websites and apps you visited are hidden from your ISP. A tool like Tor can also be used to hide your computer’s IP address so that it cannot be logged.
Incognito, a fast and secure VPN with data control and ad-block functions to make sure you can stay incognito and worry-free whenever, wherever you want to be.
