Cryptocurrency is a revolutionizing force in world finance, personal wealth-building, data sharing, and business contracts. One of the most important things that sets cryptocurrencies apart from traditional fiat currencies (government issued currency such as USD, EUR, or CNY) is the concept of anonymity. Many joining the cryptocurrency space are interested in holding their assets without being associated with them by name. But are cryptocurrencies like Bitcoin and Etherium truly anonymous?
The truth is, the public addresses associated with your wallet merely provide a layer of protection for your identity-- it doesn't conceal it from someone really willing to look. Behind this public address, your entire transaction history is traceable back the original exchange wallet where you bought the coins using fiat. If you made your first cryptocurrency purchase on an exchange, that initial purchase required you to provide all of your identifying information and bank account details because that exchange was bound by KYC (know your customer) and AML (anti-money laundering) laws. Once the exchange verified your identity, you made your purchase and sent the coins to your personal wallet. Even if you didn't do this step and kept all of your coins on the exchange, any time you've sent your coins out or received additional ones back to your exchange wallet, the transactions were recorded on the blockchain.
In this way, your real identity details are already linked to your seemingly anonymous wallet address, and the only protecting your personal details is your public-facing wallet address. This might seem like enough, until you consider the emerging field of blockchain analysis, and that blockchains by their nature permanently and publicly record all your transactions. Firms like Chainalysis, Elliptic, Blockseer, and others aim to develop algorithms to find patterns and associations between addresses, in the hopes of ultimately uncovering the real identities connected with the linked accounts. The IRS has already recognized the value of this analysis, and has worked with Chainalysis to identify individuals suspected of using cryptocurrency to avoid tax payment. It’s fair to assume that these partnerships will continue and that collaborations between blockchain analysis firms and government agencies worldwide will be searching for ways to identify cryptocurrency users.
Using a bitcoin mixing service is one blockchain analysis-resistant way to defend your personal information and financial record. Bitcoin mixers like Bitcoin Laundry work by breaking the link between your old addresses (associated with the exchange from which you first bought cryptocurrency) and new addresses. By breaking any connection between the two, your chain of transactions essentially disappears and your identity becomes untraceable. Keep your cryptocurrency wealth private and secure with Bitcoin Laundry.