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Privacy

How does BTC improve your invisibility?

Bitcoin is neither completely anonymous nor completely transparent. The privacy problem of Bitcoin lies in a gray area: the exposure of users’ financial activities ultimately depends on the capabilities of investigators and the complexity of the tools selected by users. For any activity on the Internet, there is no perfect privacy solution; and in many cases, there is no one-size-fits-all solution, which means that privacy-conscious choices are often accompanied by a balance between cost and ease of use. In addition, privacy is never static, but it is constantly evolving to echo the struggle between groups that build tools to protect and destroy privacy.

As we have seen in the evolution of encrypted messages, virtual private networks, and free knowledge projects such as the Tor project, Wikipedia, and Signal, if the right value is built into it, technology can become a tool for freedom. But as we have seen from centralized platforms such as Facebook, technology can also become a monitoring tool or even a social machine.

Unless we make a clear statement now and help platforms and protocols to put user privacy and decentralization in mind, large-scale monitoring and social credit systems will be our inevitable future.

Bitcoin is only semi-anonymous; the protocol does not know your real name, but through various methods, you can still be linked to you through transaction information.

    The blockchain analysis company is committed to de-anonymizing Bitcoin activities and selling relevant data to companies and law enforcement agencies.

    Understand how the bitcoin system works, master the use of tools such as Tor, coin controller, coin combiner, and avoid the repeated use of addresses, to protect your identity information and transaction information from exposure important.

When observing cryptocurrency from a protocol level, it is obvious that it is more privacy-oriented than traditional digital payment methods. At the basic level of these protocols, although there is usually no mapping between the user’s key and the real world, it allows us to store and transfer wealth on a global scale with an unprecedented degree of freedom.

The degree to which cryptocurrency contributes to privacy is by no means minimal or binary-depending on the user ’s individual choice of core and assistive technologies, usage patterns, and attacker capabilities and complexity, it will vary greatly.

We can observe that the acceptance rate of cryptocurrencies (especially bitcoin) is growing in countries where residents have limited economic freedom, such as Venezuela. Although cryptocurrencies have significant advantages in constructing anti-censorship transaction networks and monetary policies that are not destroyed by various forms of government, as long as authoritarian regimes can anonymize user information and sue related users at will, these advantages have little effect. This issue needs our attention.

Bitcoin is neither completely anonymous nor completely transparent. The privacy problem of Bitcoin lies in a gray area: the exposure of users’ financial activities ultimately depends on the capabilities of investigators and the complexity of the tools selected by users. For any activity on the Internet, there is no perfect privacy solution; and in many cases, there is no one-size-fits-all solution, which means that privacy-conscious choices are often accompanied by a balance between cost and ease of use. In addition, privacy is never static, but it is constantly evolving to echo the struggle between groups that build tools to protect and destroy privacy.

The Bitcoin protocol has evolved over time, which will lead to dramatic changes in its privacy characteristics. Changes in the core protocol are not limited to simple choices between privacy and transparency, but are usually accompanied by changes in security, scalability and transparency, and software backward compatibility. Historically, compared to transparency, the Bitcoin community is more inclined to choose the feature of privacy, but it is more conservative than cryptocurrencies, which are mainly privacy features.

Therefore, people considering using bitcoin to escape authoritarian government or corporate surveillance need to understand what type of traces they will leave when they use bitcoin, and whether bitcoin’s privacy attributes are sufficient to meet their needs. However, achieving this level of understanding requires some effort.

When you trade on the Bitcoin network, you will leave two traces. They can be classified as “on-chain information” and “off-chain information.” The information on the chain does not directly associate your identity information with transaction information, but it reveals information that can associate your transaction information with others. Associating your identity information with transaction information is the second category, off-chain information.

When you trade on the Bitcoin network, you sometimes send / receive Bitcoins to / from people who know you. The latter will have off-chain information that associates your identity information with transaction information.

When you combine the above facts with the fact that your transaction information can be related to others, the result is that some motivated entities can sometimes clarify how you use your own bitcoin, how much bitcoin you have and who you are with Trade this information.

Even if you are not trading with someone who knows you, there are still countless ways to associate you with the same transaction information, because bitcoin transactions are usually carried out on the network in a non-encrypted package, source IP address It can be traced back in several ways. When trading through full nodes such as Bitcoin Core, some triangulation or target traffic detection is required to estimate the source IP address, while other “light” wallets such as mobile wallets (Mycelium, blockchain wallet, Coinbase Wallet) is usually carried out through a server operated by the company that can directly see your IP address and complete transaction history.

By IP address, the geographical location IP address database can usually roughly estimate your physical location. You can use this link (https://www.maxmind.com/en/locate-my-ip-address) to test for yourself, enter your coordinates in Google Maps and other interfaces. More importantly, your IP address exposes your Internet service provider (ISP), who knows the real-world identity information of the IP owner, and ISPs are usually legally obliged to store this information for several months.

Even if you are using public WiFi for transactions, you may still accidentally connect your true identity to the websites you visit and the back-end services connected to your device. When you turn on the laptop, your Dropbox application is happy to connect it to the company’s server, which will associate your IP address with your Dropbox account in the company’s server log. Even if you do not visit any personal website account, the cookie information stored on your laptop can be linked to the cookie information of the previous browsing history through you to show your identity to the website you browse. Many websites allow third parties to track such users for analysis-only Google estimates to track users in 80% of the entire web.

Even if you clear the cookie information, the website operator can track you through different websites, as long as your browser’s imprint is unique, you can associate your IP address with identity information. Even if you are not running any services and avoid browsing some content together, the MAC address of your device will still be exposed to the network provider, using a variety of complex methods, which may be associated with your true identity. So, even if your IP address will not be traced back to you through ISP records, you may still leave other traces when using your private device. The worst privacy category is of course the use of KYC third-party services as your Bitcoin wallet, because these services will record all your transaction information and real-world identity.

You may also be associated with the latter by using web-based tools to search for bitcoin addresses and transaction information, because no one but you will search for relevant information online for no reason.

When you search for transaction information or conduct a transaction, the most well-known way to hide your source device and IP address is to use the Tor hidden service. Many wallets, including Bitcoin Core, use it as a configurable option, while some wallets have it built-in. The Tor browser is a useful tool for your web-based bitcoin-related activities, because it not only hides your IP address, clears cookie information every time you log out, prevents third-party cookies, and is not subject to most browsing The impact of device fingerprint recognition technology.

We can use the block browser to gradually understand the types of information revealed by the Bitcoin blockchain. In order to practice, we will use the open source block browser blockstream.info.

The transaction information includes the input value and output value, and is identified by the transaction ID (visible at the top of the figure above). If your Bitcoin wallet initiates a transaction, each transaction will be associated with a similar identifier.

From a high perspective, the information revealed is as follows:

  • The approximate time the transaction was mined (from the block header)
  • The address and amount to which Bitcoin was sent (for example, “transaction output value”)
  • Source of transaction funds (for example, input value)

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