HomeNEWSIs Bitcoin Really Anonymous? Check Facts and Myths

Is Bitcoin Really Anonymous? Check Facts and Myths

Cryptocurrencies like Bitcoin have a reputation for being completely anonymous digital assets and completely confidential payment methods, immune to any kind of monitoring and interference. But things aren’t quite like that.

Any user who is concerned about privacy and security can ask questions like “how do I protect my information?”, “what if someone finds out what is my IP?? Ou “What level of privacy does a blockchain offer?”.

A closer look reveals that even cryptocurrencies can reveal more about you than you might think.

What this article covers:

Anonymity, privacy and secrecy

Many people believe that cryptocurrencies reveal absolutely nothing about them because they do not understand the differences between concepts of privacy, anonymity and confidentiality of information. If the intention is to maintain perfect anonymity, then this intention is practically impossible and using cryptocurrencies will not make you undetectable.

Cryptocurrency wallets like Bitcoin allow users to use pseudonyms, which helps protect their personal identities. Many people falsely believe that because of this, payments made with Bitcoin cannot be traced and identified. But this is not the reality: your Bitcoin wallet address can be tracked.

Your IP address, for example, serves as your identification on the internet. Knowing information like your IP address makes it easieram your identification and tracking, for example (and pretty much anyone can find out your IP?? Online privacy is something that depends on many factors and variables and there is no perfect mechanism to cover absolutely all your tracks either in real life or in the online world.

blockchain technology

Currencies like Bitcoin work based on a technology called blockchain. The technical part is quite complex and requires a lot of knowledge. But, in a very simplified way, blockchain is a distributed database in which the records are permanently recorded, protected against violations and interventions with a very strong cryptography.

In a blockchain there are two types of information records that occur in individual data and in blocks. The “hard” or “concrete” part is made up of blocks of information. They carry transaction records and are stored on the blockchain forming an immovable and permanent database. Whenever a block is “completed”, another block is created, and they are all linked together.

Through blockchain technology, cryptocurrencies like Bitcoin are managed in an autonomous, decentralized and secure way.

advanced encryption

What makes Bitcoin so secure and private is the advanced level of encryption offered by blockchain technology. Basically, encryption means reordering information in such a way that it takes a specific key to decode and read the data.

This helps to maintain the integrity and secrecy of the information, avoiding external intrusions that harm the secrecy of communications, when sending and receiving data. The stronger the encryption, the lower the chances of third parties accessing the contents of the data stream.

People with an advanced level of knowledge are able to attack the algorithm itself, which makes the data vulnerable (even at a minimal level) if other people manage to decrypt the encryption.


Most features use AES 128-bit encryption, quite common for Android and iPhone devices, for example. This level of encryption is very strong and reliable. Blockchain technology in general uses another type of cryptography, the SHA-256??

Acronym for Secure Hash Algorithm (or “secure hash algorithm”), this is an extremely advanced encryption technology. In terms of reliability, blockchain technology and the type of encryption it uses are pretty good.

But there should be no mystification around these features because they too are susceptible to vulnerabilities, however small they may seem.

User identification

Make no mistake: it is possible to identify you through your use of Bitcoins. This also happens for a simple reason that many people may overlook, which is the fact that transacting with Bitcoins is a confidential process, but acquiring Bitcoins itself is not an anonymous process.

When you buy Bitcoins, you acquire them using fiat currency in transactions that require identification from you (such as an ID, CPF, passport, driver’s license or other type of personal document). Just like conventional banks, the acquisition of cryptocurrencies requires KYC (know your customer, or “know your consumer??

This is required to combat and prevent money laundering crimes and other illegal activities. As much as cryptocurrencies are managed autonomously, governments around the world create regulations and requirements that honest businesses cannot ignore.

More realistic notions about online privacy

Cryptocurrencies are more private and decentralized ways of transacting. Bitcoin is very private, secure and offers a higher level of privacy. But it is necessary to undo misinformation and misconceptions about him.

There is no such thing as perfect encryption or any form of “complete anonymity”. Users are identified when purchasing Bitcoins. Furthermore, the blockchain registry (or ledger) is accessible and open to the public, which includes government authorities and bodies.

There are several ways to reach users when it comes to registrations for using cryptocurrencies like Bitcoin. Alterar your IP address, uUsing less intrusive browsers (such as Tor) or changing proxies to stronger options are things that guarantee greater privacy but do not offer complete anonymity, and the same goes for using cryptocurrencies.

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