Using Bitcoins is not secret, but pseudo-anonymous. Most bitcoin experts now this by now. However, the reason as to why it is not anonymous to many is evident. What can be done to anonymize bitcoins and de-anonymize bitcoins and reclaim privacy is not known.
How Bitcoins transaction work
It is important to understand how bitcoins work on a plain level to better understand bitcoins anonymity. Most importantly, there is a series of operations on the Bitcoin protocol. These transactions consist of different data packages that include transaction outputs and inputs. Inputs refer to the Bitcoin wallet addresses where they come from and can be spent using the associated private address key. The outputs refer to the wallet addresses where bitcoins are sent to. Each transaction can be traced down from the preceding transfers to the several outputs they come from.
It is also possible that a transaction can have one input and output. However, that scenario is rare as the bitcoins sent can only equal the amount received earlier. Instead, a transaction can have smaller inputs to qualify for a larger transaction. For instance, if someone has three inputs from different sources and sends 2.5 bitcoins to a store online, the software will make a single transaction from the three inputs.
What makes Bitcoin anonymous?
Bitcoin is regarded as anonymous for three reasons.
First, unlike most other payment systems and bank accounts, Bitcoin wallet addresses do not show user identity in their protocols. Anyone can create a new address without submitting any personal information.
Second, these transactions do not require the user’s identity. Therefore, anyone can transfer bitcoins from addresses they control to other addresses without any personal information. The receiver does not need to know the sender identity like physical cash
Moreover, third, the transactions are forwarded by nodes randomly on the peer-to-peer network. They do not connect with IP-addresses. This transaction makes it unclear whether the received data created the nodes or not.
Like ✪ Share ✪ Be Awesome