The Bitcoin operates with an unprecedented level of transparency. Its underlying blockchain technology continuously validates all transactions on a traceable ledger shared across the Bitcoin network. Users have a unique public address, similar to a bank account number, to transfer funds.
Those who wish to receive payments in Bitcoins must share their public address with the intended sender to determine where to transfer the designated funds. The creation of these addresses is done privately in each user’s wallet. However, public keys are tainted by the history of all transactions conducted through them once they are used.
Bitcoin addresses cannot remain completely anonymous since users usually need to disclose their identity to receive goods and services. The irreversibility of the blockchain implies that untraceable information could be easy to track down in the future. Nonetheless, these guidelines can help you protect your privacy when using Bitcoins.
Use New Addresses to Receive Payments
Using a new Bitcoin address each time you receive a payment is one of the best ways to protect your privacy. This allows you to isolate each Bitcoin transaction, making it impossible for anyone to link all your transactions to a particular address.
Create Multiple Wallets for Separate Transactions
Having different wallets for separate transactions can also allow you to maintain a high level of confidentiality when using Bitcoins. Major cryptocurrency exchanges such as [bitcoin code](https://bitcoincode-fr.com/) allow users to create multiple wallets for different transactions. For example, you can have separate wallets for Bitcoin trading and paying for goods and services. This ensures that those who send you funds or receive them from you do not know the other Bitcoin wallets you own and the transactions carried out through them.
Do Not Share Your Bitcoin Addresses and Transactions on Public Spaces
Posting your Bitcoin address or transaction details on a public space, such as a social media platform or website, could expose you to serious privacy risks. You may post an address if you intend to receive donations or public payments transparently. However, remember that the address will be tainted by the transaction history. It would be better to create a new address to transfer the funds after the donation or payment receipt period expires. Bitcoin users should also ensure not to ask third parties for information about their transactions.
Hide Your Device’s IP Address
Bitcoin is a peer-to-peer network, meaning others on the platform can listen to your device’s transaction relays and record your IP address. Full node clients relay transaction data of users like their own. This affects the difficulty of finding the source of a specific Bitcoin transaction, and users can easily confuse any node as being the origin of a transaction when it is not. Using an anonymous browser like Tor to hide your computer or tablet’s IP address will prevent others from connecting, thus protecting your privacy.
Mixing Services
Mixing services are available online, blending traceability between users by receiving and sending back the same amount of funds through independent Bitcoin addresses. However, the legality of using mixing services varies by jurisdiction and may be subject to different regulations. These services also require high trust between users and service providers to avoid loss or theft of funds and keep a record of all requests. Mixing services can break traceability for small amounts but become increasingly challenging for larger transactions.
The Bitcoin network is currently undergoing several improvements to enhance user privacy. For example, it is developing the payment message API to prevent multiple address spoofing when making payments. Nonetheless, the guidelines presented above can help ensure better privacy protection when using Bitcoins.
