By Gabriel Negrin
Oh, you beautiful bitcoin. Every bitcoiner wants to protect you as though it were their own son. And rightfully so. Each earned Satoshi represents a new opportunity for many. So it’s only natural to be overprotective of one’s crypto stash.
I mean, no one wants to lose their bitcoins due to human error, right?
When talking about money, privacy is not something we can take lightly for it plays an important role when we are making transactions. Maybe we’ve compromising our information — destroying every single piece of anonymity in the way. But truth be told, a new layer of protection never hurts.
So how can we increase our privacy when using bitcoin?
Anonymity v. Privacy: Similar But Not The Same
Sometimes the line between anonymity and privacy is blurry. But knowing the difference between the two is paramount.
Privacy is the ability to conceal information or express information selectively. But it is not just ability. As human beings, we have the right to protect our information and maintain a private life.
Anonymity, on the other hand, describes a situation where a person’s identity is unknown. Many people prefer to remain anonymous to protect themselves. These people usually use a pseudonym that cannot be easily related to their identity.
The bottom line is, you can have privacy, but people can know your identity. When you are anonymous, nobody knows the face behind the coin. Just like Satoshi.
Bitcoin Is Anonymous — Just Not Enough
The security provided by bitcoin has always been a source of debate for cryptocurrency experts. Some claim that it is infallible while others do not consider it completely secure. The truth is the privacy and anonymity bitcoin offers to depend on the precautions taken by the user.
Many people believe bitcoin offers an anonymous payment network. You and I know this is not entirely true. Payments are completely transparent. All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network.
And this is not the only thing we need to have in mind. If someone has your address, they can see your balance and transactions.
Even worse — sometimes we pay for goods and services with bitcoin but we still have to disclose our identity. Anonymous enough? I think not.
With this in mind, privacy and anonymity are things we must improve. But, learning how requires reading and informing yourself. Here are some aspects to keep in mind relative to your privacy:
Enable Wallet Privacy Features
Some wallets include useful security features to protect your data. For example, some wallets hide potential links between the sender and receiver of funds. This makes transactions more difficult to identify.
Do Not Reuse Addresses
More than a piece of advice, it is a golden rule to remember every time you use bitcoin. As we said before, anyone can see the balance and operations of an address. If you want to improve your privacy, you should use a different bitcoin address for each payment received.
To do so, use wallets that generate new addresses each time you make a payment. This way it is possible to isolate each of your transactions — making it impossible to associate them with each other.
This is an extra step to make it more difficult for others to determine your transactions. Simply put: protecting your addresses equals protecting your money.
Be Stingy With Your Personal Information
It sounds obvious, but nowadays we share part of our personal information on the internet unconsciously. So my advice is to avoid sharing information such as your date of birth, home address, or email address. This also includes not posting a bitcoin address on social networks or websites.
Run a complete Bitcoin node
The more nodes you are running, the more decentralized and secure the network will be. Running a full node is the only way you can reliably spend your BTC. Currently, it is the most private way to use bitcoin, with no one being able to identify who the addresses belong to.
Do not deposit your data and information in the hands of third parties. You can use the Samourai Wallet Dojo server and the Electrum servers.
Send On-Chain Transactions Through Tor
As Bitcoin is a P2P network, it is possible to observe the retransmission of transactions and record IP addresses.
It also reveals your Internet service provider, which in turn knows your real identity. And they are legally obliged to store it for several months. For this reason, it is appropriate to hide the IP address with the Tor protocol so that it cannot be recorded.
Tor protocol and a good VPN for the win.
With these basic tips, you will be able to increase your privacy while using bitcoin. Remember to do your own research. Learn more about ways to protect your security and continue making secure transactions.