Yes, it's nothing new, Bitcoin does not offer anonymity. Recently, after the closure of two large illegal markets on the Dark Web, a debate has started again about how anonymous Bitcoin really is, and how secure transactions are.
The way the Bitcoin network works is quite technical and has to do with terminologies found in encryption systems, in which the key is blocks and the confirmation of transactions.
The anonymity of electronic wallets is what keeps bitcoin owners anonymous, which seems to be the main reason they are untraceable. The system is designed so that each new block chain-wise confirms the authenticity of the previous block.
The process of confirming transactions by solving each block is called mining and the people who participate with computing power are called miners.
According to the definition given by WikiPedia, Bitcoin is basically an open source software (open source protocol). Consequently, the source code of the software is public and available to anyone who wishes to check the details of its operation. The above principle allows anyone to freely and free of charge copy and develop their own software based on the existing one.
On the advantages of digital currency, Wikipedia states:
Transaction Privacy: Each user can create, through the software, an almost unlimited number of addresses through which to execute their transactions. These addresses are pseudonymous, meaning they have no direct connection to the user's real identity or location, although they have identifiable characteristics to be located by the network. In this way, the user can maintain their privacy by disentangling their transactions from their personal information.
How safe is Bitcoin?
The above does not imply the anonymity of transactions by definition, as all transactions are published, and even if a transaction has a known (public) recipient, the identity of the user may be deduced from additional information. This is the main reason why the use of bitcoins is not advisable for illegal activities, especially large-scale ones, as the trace of transactions is not only not erased over time, but remains available for examination by everyone, forever.
An inside story:
BitMixer, the world's most popular Bitcoin mixing service, announced last weekend the closure of the company.
Bitcoin mixing is a process of taking money from one account and breaking the amounts into hundreds or even thousands of smaller transactions to transfer them to other accounts.
For years, Bitcoin mixing was believed to be a very secure way to transfer funds anonymously from one account to another, mainly because there was no technology to track all transactions and reveal the destination account.
BitMixer: Bitcoin is not anonymous by design
In a statement, the owners of BitMixer said they stopped their service when they realized that Bitcoin was a “transparent non-anonymous system by design.”.
In recent years, companies have been investing large amounts of money in effectively tracking Bitcoin transactions through the public ledger (blockchain).
For example, this week (unrelated to the BitMixer announcement) – Google and blockchain analytics firm Chainalysis announced that they tracked all Bitcoin transactions made for ransomware payments, even when the amounts were routed through BitMixer.
In fact, almost all of the scammers were using BitMixer to launder their funds.
This week, authorities also arrested the owner of Bitcoin exchange BTC-e for his involvement in laundering money from various Bitcoin platforms. Authorities reportedly tracked stolen funds to some of the BTC-e, even after those funds were funneled through BitMixer.
BitMixer: mixing Bitcoins will become illegal
BitMixer was founded in 2011 and closed three days after the announcement of the closure of the two largest illegal Dark Web marketplaces – AlphaBay and Hansa.
The owners of BitMixer were well aware that their service was being used by criminals. They mentioned this in their final statement, citing that events on the Dark Web influenced their decision to shut down their company.
“Blockchain is an open book, and we believe Bitcoin will have a great future without dark market transactions. You can use Dash or Zerocoin if you want to buy weed,” the BitMixer team said.
“I hope our decision will help make the Bitcoin ecosystem cleaner and more transparent, and we hope that our competitors will hear our message and close their services as well, as very soon this type of activity will be considered illegal in most countries.”
The beginning of the end for Bitcoin mixers
BitMixer's announcement comes as no surprise to anyone familiar with Bitcoin. Cryptocurrency enthusiasts are well aware of the fact that Bitcoin is not anonymous. This is why some have created new cryptocurrencies like Monero and Zcash.
BitMixer's announcement and the company's shutdown will likely be a milestone in Bitcoin history, as it is the first mixer service to shut down after realizing it was ineffective and futile.
As authorities expand their regulatory powers over Bitcoin, BitMixer's prediction that mixer services will soon be illegal may become a reality.
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https://el.wikipedia.org/wiki/Bitcoin
https://bitcointalk.org/index.php?topic=2042470.0
