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These days, more of us are concerned about our privacy online and how to protect it. Because we’re more aware of how much our data is tracked, collected, and used, many consumers would rather be as stealthy online as possible.
But does this apply to cryptocurrency? These digital assets have the reputation of being better for our privacy than regular currency/assets but do they grant full anonymity while trading? In this article, we’ll explain just how far the limits of crypto-powered privacy go.
Cryptocurrencies are digital currencies based on blockchain technology. As such, all transactions completed using crypto are recorded and validated on their native blockchains. If you were to complete a transaction using Bitcoin, for example, it would be permanently recorded on the Bitcoin blockchain and anyone could see it. This is why crypto whale watching exists- at any given point, you can see what transactions were completed using any wallet address and even see how much crypto is stored in the wallet.
However, it is very hard to tell who owns certain crypto or completes certain transactions. At best, we can identify the wallet addresses associated with certain transactions and guess who is behind them but it is hard to tell for sure. As such, we can say that cryptocurrencies are pseudonymous and not anonymous. At the same time, they are decentralized and offer a level of privacy (especially from centralized institutions) that is hard to replicate with fiat currency or traditional stocks.
Crypto tokens might not be fully anonymous by default but they offer much more privacy than what you’ll find elsewhere. As we’ll explain in this article, there are several tools and techniques you can leverage that will make your crypto trading experience much more private and enjoyable.
Now that we’ve broken down how crypto works, it is worth looking at the different ways that you can be as private as possible while using it.
One of the first ways that you surrender privacy when using crypto is by signing up on trading platforms. Usually, this will require you to provide your name, government ID, and other sensitive information, which is counterproductive if you want to stay anonymous. Luckily, this is easily addressed by opting for no-platform accounts instead. As the name suggests, and as Sal Miah writes, these allow you to trade crypto without ID verification. Rather than setting up an account, you can simply connect your crypto wallet to the platform and have tokens deposited and withdrawn as needed. If you plan to trade crypto and want to be stealthy, definitely consider this.
Virtual Private Networks (VPNs) are much more common these days and can be a great way to trade crypto anonymously. A VPN can be used to obscure your IP address, thus protecting your identity online. That way, not even your internet service provider can tell what you are doing at any given time. VPNs have also proven popular for crypto traders in places with more stringent digital asset laws. By leveraging VPNs, many are able to access crypto trading services that they otherwise would be shut out of. If you find yourself in this situation or simply want to stay more private, consider them.
While most cryptos have transaction details and addresses recorded on public ledgers, there is also a class of cryptos called privacy tokens. These cryptos do not record such details on a ledger and thus, are very hard to track. Tokens like Monero can be used by privacy-seeking crypto lovers because not even the token developers will be able to see your wallet address transactions and details. And while privacy tokens have proven to be fairly controversial in the past, they remain popular for this reason.
Because crypto transactions are recorded on public ledgers, most people can track the journey of a single token through several wallets. But this can be avoided by using a token mixer. As the name suggests, these ‘mix’ several crypto tokens digitally, so their origin can’t be tracked. Even if someone was tracing your tokens up until that point, they are randomized afterwards. Be careful if you choose to use a token mixer, however, make sure it is a legal one. Several token mixers have been sanctioned by world governments in the past due to their use by criminals so keep that in mind.
When browsing the web for your crypto trading needs, you might want to consider using Tor. This is a service that encrypts and routes user traffic through a series of nodes. This means that such traffic is harder to track by third parties and thus, user privacy is protected. Some choose to use Tor for both crypto and non-crypto-related activities so definitely consider it if overall privacy is your goal.
Disclaimer
The information on Coinsniper is user-generated and not verified. Coinsniper does not provide financial advice or facilitate transactions.
Also note that the cryptocurrencies listed on this website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments.
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