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Are Bitcoin Transactions Traceable

author
Ellen Grant
• Tuesday, 19 January, 2021
• 7 min read

A very big debate in the crypto community involves the traceability of Bitcoin transfers. Bitcoin transactions can easily be traced by anyone on the web, at least at the wallet address level.

bitcoin transactions wallet understanding bitcoins bemoneyaware
(Source: www.bemoneyaware.com)

Contents

This practice, however, does not guarantee that you will get information related to the identity of the parties involved. There have been countless hacks, with hundreds of thousands of stolen Bitcoin, and very often no suspects to point at.

In many cases, Bitcoin wallets help their users remain anonymous. By carefully tracking where Bitcoin is being sent, they have managed to solve crimes.

Paul Glass, who has expertise in financial disputes, technology-related disputes and cybersecurity, in his article “How secure is blockchain?” says that at the Black Hat Asia conference in March 2015, Interpol demonstrated a proof of concept of software which could become malware allowing the subversion of the blockchain underlying Bitcoin. Researchers from the University of Newcastle have also introduced a botnet command and control mechanism to send messages to bots on the Bitcoin network.

These are early demonstrations of potential vulnerabilities, and the extent to which they can impact on an entire blockchain is not yet clear. Bitcoin has been in circulation since 2009 and promotes economic liberty based on anonymity and high-tech security through Blockchain.

But the paradox of Bitcoin is that actually through Blockchain you make public information of your financial history. If people do mix or agree to build common transactions, it might be difficult to track the origin of the coins.

bitcoin transactions april thousand averaging since per number
(Source: www.newcurrencyfrontier.com)

If you want to increase security, you can avoid dealing with people who have “suspicious” activity or very difficult to trace. Gerard concludes that the majority of people who use digital currencies want to build their reputation (“trust identity”) rather than hide.

There is a huge misconception that Bitcoin transactions and Bitcoin wallets are not traceable. Blockchain technology is a decentralized distributed ledger system and this ledger is like a log book of Bitcoin generation and movement.

Decentralized Distributed Ledger System can be translated in plain English as a shared collection of accounting records or logs with strangers all around the world. In other words, anyone who downloads and runs the Bitcoin software on their computers, which isn’t technically too challenging by the way (in case you were wondering), can access each and every transaction since Bitcoin went online.

However, this cancels out if the person purchased Bitcoin through a cryptocurrency exchange or broker, who are legally required to provide customer identification. Therefore, a person’s identity can easily be traced back to their public key (BTC Wallet).

If the user attempts to cash out any of the Bitcoins in this wallet on any legitimate cryptocurrency exchange, he/she will have to provide some kind of identification of which a BTC address will be attached to. And if companies like Whale-Alert as well as Crystal blockchain can monitor these transactions in a matter of minutes as well as the exchanges were their wallets are hosted, then so can sophisticate hackers.

electrum bitcoin wallet release newsbtc week
(Source: www.indiabitcoin.com)

Imagine someone you don’t know, accesses your bank account without your permission, views your transaction history and then goes to the account of your family member you sent money to and access to their transaction activity. And at that time, having a VERY PUBLIC distributed ledger system wouldn’t have been a problem when the mobile devices and online transactions were not all that common.

Disclaimer: I am not a financial advisor and the information provided does not replace professional advice. Cryptocurrency prices are highly volatile as well as evolving very quickly.

This post may contain inaccuracies, so please do your own research before placing money in any website. There is a huge misconception that Bitcoin transactions and Bitcoin wallets are not traceable.

Decentralized Distributed Ledger System can be translated in plain English as a shared collection of accounting records or logs with strangers all around the world... Blockchain, the network that many cryptocurrencies use, keeps a public record of every transaction ever made in their chains.

Bitcoin also shields participants’ identity by using pseudo names and addresses. However, all the actual transactions are registered on the blockchain, which is open to public access.

bitcoin anonymity mixers privacy tools mixing service blockchain bitcoins tumble mixer wizard anonymous
(Source: www.bitrates.com)

On July 15, hackers got access to Twitter accounts including Barack Obama, Elon Musk, Wayne West, and others. While bitcoin is traceable, tracing the entire chain of transactions can be a daunting task.

Although software companies have found a number of transactions that could be used to identify the perpetrators, it could be still very difficult. According to Tom Robinson, the co-founder of data analytics firm Elliptic, “Everything is visible on the blockchain.

While Monera’s underlying technology is also blockchain, it is intentionally configured to be obscure. It obscures the transaction details, including the sender and the recipient identities, which makes traceability a challenge.

Other cryptocurrencies that provide enhanced privacy include Cash, Komodo, and Horizon. In extreme cases, governments can interfere to a very large extent into the privacy offered by cryptocurrencies.

For example, Japan's government has pressured cryptocurrency exchanges to stop using privacy-enhancing currencies like Monera. In the U.S., the Department of Homeland Security has also called for information on privacy-enhancing tokens like Monera.

bitcoin bitcoins cryptocurrency wallet phone use key private guide blockchain coinsutra everything dummies transfer safe pdf way beginner transaction
(Source: themitpost.com)

U.S. researchers have evidence that hackers used to infect computers to mine Monera and send the currency back to North Korea. NOTE: I'm just talking about cashing out bitcoin into money, not buying some cheap stuff.

Cdecker 8,12411 gold badge3434 silver badges5656 bronze badges You can transfer them to other wallet addresses, but it will be visible in the blockchain.

You can cycle them through many accounts, but unless you have hundreds or thousands of accounts, then any illicit activity could be traced back to your first transfer by a sufficiently savvy analyst. I also think that in the current mining climate, it would not be a trivial feat to acquire enough computers to generate enough bitcoin to fund any significant endeavor.

Looker Loourr3,03244 gold badges1414 silver badges3434 bronze badges So your suggestion is a bad proposition for someone who wants to remain unexposed forever.

Plus, if we start to look at the distribution of the markets and popularity of bitcoin, and keep in mind, that Credit Card fraud are still alive, then anybody can get anonymously great amount of bitcoins and anonymously transfer it to any Earth's point. Mining of bitcoin is not the best way for terrorists to get money, but to transfer, its looks like the greatest one.

trading
(Source: www.pinterest.com)

(1 hour = 6 confirmations, and one terrorist have completely paying another for service) Bitcoin transactions are perfectly traceable but of course not always the single users.

If I have 201mBTC on address A and transfer 100mBTC to someone and offer 1mBTC as fees then we have two outputs with 100mBTC each, one is for the trade partner and one back to me as change.

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Sources
1 en.wikipedia.org - https://en.wikipedia.org/wiki/Gareth_Edwards_%28director%29
2 en.wikipedia.org - https://en.wikipedia.org/wiki/Rogue_One