How To Anonymize Bitcoin Transactions

One of the reasons why users choose cryptocurrencies over private money is a higher level of privacy and anonymity. While creating a bank account requires ID or other means of identification, you do not need to provide any papers to create a crypto wallet. However, due to the transparent nature of blockchain, you need to apply additional measures if you want to sell or buy Bitcoin anonymously. Below you will find useful information about various means to protect your identity and make your crypto transactions untraceable.

  1. Use a Bitcoin Mixer

Bitcoin Mixers, also known as crypto tumblers obscure transaction sources. Many resources are providing this service on the market, but the core principles of their operation are identical. All coins received from multiple users are added to a coin mix. They get joined and mixed and then transferred out to the target wallet. Now, if someone wants to find out the source of the transaction, they will need to analyze not the one blockchain record, but the data of multiple small transactions, which makes identifying the real sender and receiver practically impossible.

Modern crypto mixers can apply various technologies to further obfuscate data. For example, they can use an untraceable cryptocurrency as an interim step. Some of them also apply a random transaction delay and commission fee, so they cannot be used to calculate the characteristics of an initial transaction.

  1. Benefits of a Decentralized Bitcoin Mixer

All coin tumblers are divided into two big categories, namely centralized and decentralized ones. Centralized tumblers have a central controlling entity, which involves additional security risks. You need to trust the organization with your money. Moreover, sometimes authorities make centralized tumblers obligated to follow KYC procedures, which means you still will have to provide some identifying information. While it is not available to other users, it can be requested by authorities in some cases.

Due to these problems, decentralized Bitcoin tumblers emerged, which are better at protecting the user’s identity. The mechanism of the decentralized mixing lowers fraud risk because the participating users will not verify the transaction unless they get their money back from the pool. Moreover, some of them follow a no-log policy, which means they cannot disclose information about clients to authorities simply because they do not have such information.

  1. Use Privacy Enhancing Wallets

Another method of anonymizing Bitcoin transactions which we recommend to use along with Bitcoin mixers, is privacy-enhancing wallets. There are many reliable Bitcoin wallets to use, including web-based and local storage. Some of them were developed with a specific focus on privacy protection. A good example will be the Wasabi Wallet and the Samourai Wallet. One can say that they have a sort of built-in Bitcoin mixer. They use a CoinJoin technique, which allows the same process: the transactions of multiple users are combined into a single pool and then sent out to the target address.

Do not forget about basic cyber-security rules while operating your crypto wallet to transfer Bitcoin anonymously. Use a secure unique password and enable 2FA when possible. Do not store all your coins in one wallet in case some problem arises. Be extremely cautious with large transactions, as they are more likely to attract fraudsters. Do your due diligence while looking for the best coin mixer, crypto wallet, or some other crypto-related services. Read about other users’ experiences to find the most reliable option.

  1. Use A Virtual Private Network

Using a virtual private network is one more component of protecting your identity and buying crypto anonymously. Internet providers can trace your activity, such as what websites you use. At the same time, websites can tell which country you join from. Virtual private networks prevent them from doing so. When you enable a VPN, the traffic from your PC goes through a remote server before it reaches the target website. As a result, a coin mixer or some other website you use will not be able to trace, what country are you logging in from or what other resources you visit.

Most VPN services have additional built-in security measures. For example, they will warn you if you visit a suspicious website, face the risk of phishing or catching malware. If you follow the instructions thoroughly, VPNs will not only help you to make cryptocurrency untraceable but enhance your cyber-security in general.

As you see, there are various ways to protect your identity online. If you want to buy BTC anonymously, you need to use them in connection with each other, because they are related to different aspects of protection. Bitcoin mixers are one of the most important tools in this field. By applying them to each transaction you need to pay some commission fee, but in turn, you will make all your crypto operations safer while successfully protecting your identity. 

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