Is blockchain really anonymous?

Written by Anna Komashko
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Investing reporter
ECOS community manager...
2   min.
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Is blockchain really anonymous?

Let’s start with the most common mistake 👇

Bitcoin is not anonymous by nature!

Instead, it protects the owner with a pseudonym. On the blockchain, your alias is the address where you receive bitcoins. Every transaction and wallet address used is permanently stored on the public blockchain and visible to anyone who searches. 

The addresses themselves do not reveal any personal data. However, they provide a basis for further investigation. Think of your bitcoin address as an email address or an online alias: how difficult it is to trace your identity depends on what you do with it. With forensic analysis, any bitcoin address used in a transaction is highly likely to be traceable.

Any bitcoin transaction you make with a party that knows your identity results in information being leaked. This information can identify your past and future activity on the blockchain. For example, when you buy a phone through an online store. Chances are you’ll give them your address so it can be delivered.

You may also be identified if you use a private Wi-Fi connection. Usually, we have to provide our data to use Wi-Fi. Through this, your identity can be matched to your IP.

Likewise, you publicly post your Bitcoin wallet address somewhere, such as on a forum. Even if it doesn’t contain any identifiable data, you may have used the same username somewhere else. You may have shared identifying information in another post under this username. Then someone can track them down by looking at your message history.

It is especially important to note that multiple Bitcoin addresses can be grouped since you can see all the transactions on the Bitcoin network. Then they can be bound to the same address. Therefore, if only one of these addresses is associated with a real person using one or more other deanonymization methods, they can all be associated.

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