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In one of our previous articles we’ve talked about how Bitcoin is not completely anonymous. Ever since we’ve been getting emails asking how to use Bitcoin anonymously around the web. So we now bring before you the complete guide to using Bitcoin anonymously. Raising your privacy level will lower your risk of getting hacked, scammed or targeted by criminals. Once mastered, spreading the awareness of such techniques will incrementally harden the Bitcoin network against attackers of all kinds. Although it’ll never be necessary to verify your identify yourself in order to download and use a Bitcoin wallet, for the average user this is where the system’s anonymity ends.
Default Bitcoin is still far more private than credit cards but certainly less so than cash. This reality raises a number of issues for business and personal privacy. To the privacy-conscious, the above points are bad enough. Also, certain Bitcoin Core developers are working on improving privacy through the Confidential Transactions project, at this stage the fact is that using Bitcoin anonymously requires knowledge and a little extra work.
It’s never too late to become anonymous Let’s assume as our starting point that all addresses within your Bitcoin wallet can be linked to your real identity in one way or another. If you’ve bought coins from an exchange with identity verification procedures or done business under your real name, this is quite possibly the case. The good news is your privacy can be partially or fully recovered from this state. Online security is often characterised as a trade-off between effectiveness and convenience. It’s up to the users to choose on which end of this scale they wish to be one.
This will then allow them to calibrate how much time, effort and money to expend on improving Bitcoin’s privacy. This guide offers several methods to boost your Bitcoin financial privacy, starting with low-effort techniques and escalating to more effective but demanding methods. One Simple Recommendation to Improve Bitcoin Privacy Whenever possible, avoid re-using addresses. Generate a new address for each transaction you receive. There’s little point updating a static address associated with your identity, such as a Bitcoin tip address linked to a social media profile, but this is recommended practice in most other situations. Warning: if using a non-HD wallet such as Bitcoin Core, remember that only 100 addresses are contained in the initial key pool generated from the wallet’s private key.
Remember to backup such wallets regularly or follow the link to learn how to increase the maximum key pool size. The information site, Prism-Break, provides a variety of recommendations for different operating systems and devices. HTTPS Everywhere is another good option. Managing Passwords Human-memorisable passwords tend to be weak. Bitcoin exchange and other sensitive accounts. Trying to memorize a different password for tens or even hundreds of accounts is similarly a recipe for disaster.
Tor works by routing your connection through several other participating computers. To help you get up and running with Tor and the darknet, check out our guide to Accessing the Darknet in Under 2 Minutes. Once you’re browsing through Tor, you may research internet anonymity further without undue concern over prying eyes. You may also access The Hub forum which hosts many excellent guides to clearnet, darknet and Bitcoin anonymity.
Running Bitcoin through Tor As of release 0. 12, Bitcoin Core will automatically connect through Tor if it detects its presence. Disable your internet connection and configure the new wallet to run exclusively via Tor before launching it. You may then re-enable your internet connection and allow the wallet to sync. Directly transferring bitcoins from your old wallet to this new one will somewhat obscure the ownership of those coins. IP as well as the sites you access. If you’re willing to pay for a little extra peace of mind, consider a VPN service.
Unlike certain sites which block access from known Tor routes, VPNs usually afford unlimited access and much higher bandwidth than the Tor network. It’s entirely possible to access Tor through a VPN for another layer of obfuscation. Disk Encryption Leaving traces of your activity on your hard drive or removable media represents another way in which anonymity may be compromised. Disk encryption software allows you to encrypt a file, folder or entire drive such that it can no longer be access without a password. Encrypting your Bitcoin wallet file and any sensitive information stored on your computer is good practice. Wikipedia offers a good comparison of the available disk encryption software options. Warning: if you lose or forget your password, you’ll lose access to any encrypted files.