How anonymous is crypto? The answer may surprise you: Bitcoin and PrivaCrip
For a long time now, it has been widely accepted that crypto transactions, especially those made on the Bitcoin network, are 100% anonymous. While this is indeed a valid claim, some pitfalls follow, and they are more extensive than you think. To exemplify what I mean, I will refer to a research study from Qatar University.
The university published a detailed analysis showing how easily law enforcement or even average joes can dig up evidence of years-old Bitcoin transactions when users weren’t careful enough to launder their money.
Crazy to think about it, but in more than 100 cases they linked someone’s Bitcoin (BTC) payment on the Silk Road to that person’s public account. Adding even more fuel to the fire, the researchers revealed that in more than 20 instances they were able to link these public accounts to specific names and even locations.
In this editorial, I welcome you to join me in the exciting quest for truth to answer once and for all: is blockchain technology really anonymous?
The Bitcoin Privacy Paradox
Two mutually exclusive features can best explain the Bitcoin privacy paradox: Since any bank or government does not control the cryptocurrency, it is incredibly challenging for someone’s real identity to connect with their Bitcoin money. However, the public ledger for Bitcoin (BTC) transactions also has an immutable record of every Bitcoin transaction ever made from one address to another. This means that finding someone’s address to which they send or receive money becomes relatively trivial unless extra care is taken to hide these transactions.
Pandora’s box
Since Qatar University’s research, very few academics have documented what constitutes the right way to connect the dots. In fact, even the university team admitted that they have only used very decent tactics in the decryption. Namely, they did not use a method where links are created between Bitcoin addresses such as “identity clusters of addresses” associated with the online black market. They also did not use the help of the police to provide access to information about the wallet addresses using Coinbase, one of the largest centralized exchanges in the world.
Does Crypto Solve These Privacy Issues?
The short answer is yes. For example, Bitcoin’s latest upgrade, Taproot, was aimed at tackling some of the aforementioned issues. Apart from storing multiple signatures and transactions together in one block, which makes it easier and faster to verify them, it also eliminates what is called discrediting the recipient. In a nutshell, this feature makes it harder to identify entries on Bitcoin’s blockchain.
Of course, this was not done to spread the safe use of selling drugs, but rather to give equal opportunity for each block to be accepted into the network. Miners would mine the next block without fully knowing its size (no reason to discredit its acceptance) and therefore faster transaction speed.
Another example of privacy development is an upcoming project, PrivaCrip (PRCR), which will challenge crypto’s status quo at its core. The main idea behind the project is that users’ personal information will be represented through tokenized data that will only belong to them.
This will allow privacy-enhanced applications to be built on top of the PrivaCrip network, which will not only accelerate the adoption of Web 3.0, but also speed up crypto adoption worldwide. And with less than a month left before the pre-sale of the project ends, be sure to check it out.
The bottom line
I guess the best possible answer to the question posed would be that blockchain technology is anonymous, but only to a limited extent. This is why projects like PrivaCrip (PRCR) are looking for ways to put our personal information recorded on a blockchain ledger back where it belongs: in the hands of users.
The growing use of Web 3.0 will inevitably challenge how we perceive data and how it is distributed, and one day it will become completely discrete. However, remember that even the most anonymous technology can backfire on you, so be aware of that the next time you pay with crypto.
If you want to learn more about PrivaCrip, visit their website for information.
PrivaCrip (PRCR)
Pre-sale: http://join.privacrip.io/
Website: http://privacrip.io/
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