US Government Reportedly Cracking Bitcoin’s Anonymity: WSJ

The Wall Street Journal recently published an article that US authorities have “cracked” Bitcoin’s anonymity. However, Bitcoin is pseudonymous, not anonymous, a point often emphasized in the industry.

The Wall Street Journal recently published an article stating that the US federal government cracked down on Bitcoin’s anonymity. The outlet’s report talked about a $3.4 billion crypto fraud scheme carried out by one James Zhong. But, as often mentioned in the industry, Bitcoin is not anonymous.

Bitcoin’s Anonymity Cracked?

The fact that federal authorities were able to uncover a scheme by Zhong does not necessarily compromise Bitcoin’s anonymity. It’s a long-standing pet peeve among those in the industry that the general public mistakenly believes that the Bitcoin network is anonymous. Perhaps this could have been a poor choice of words by the outlet, but crypto enthusiasts are concerned that the idea of ​​Bitcoin being anonymous has long been disproved.

Rather, Bitcoin is pseudonymous and does not offer full privacy, like that offered by privacy coins such as Monero. Bitcoin is indeed traceable, but admittedly it takes some effort to identify any. The growth in the market makes it easier. The arrival of more sophisticated tools and processes also contributes to this trend.

Zhong carried out the theft when he was a 22-year-old student, finding a loophole on the defunct dark web Silk Road. He often moved the funds through multiple accounts over eight years to hide his tracks, but was eventually discovered.

The idea that there are digital breadcrumbs that can be traced has always existed in the market. Bitcoin was never anonymous in the first place. The only difference is that it is now easier to do so, especially with what companies like Chainalysis have to offer.

Bitcoin is pseudonymous, not anonymous

Bitcoin is pseudonymous, a term that crypto supporters are keen to highlight. Wallet addresses are simply pseudonyms for the holder, and these addresses can be flagged as suspicious or something else. It is possible to trace someone’s identity through this.

However, there are still ways to overcome this pseudonymity, namely by using Bitcoin mixers. The US government is aware of this and has been working to shut down cryptocurrency mixers.

Blockchains actually act as the perfect place to store evidence. Information stored in the ledger is immutable and can be traced back to its very origin.

The report comes not long after the New York Times published a report on the energy consumption of the Bitcoin mining industry. The report estimated the emissions and energy use, but industry insiders were unhappy with the method.

As such, many in the crypto community still take issue with how the mainstream media studies and reports on the crypto asset class. This is a story that has been going on for years, and the crypto community is keen for mainstream outlets to understand the technology better.