In terms of design, Bitcoin transactions are never linked with any identity or individual. So public addresses are employed for the transactions and these alphanumeric strings get stored in the blockchain. The transaction will not reveal the name of the person involved or his address or email id. However, using IP address and public address it is indeed possible to track the individual. This is exactly why Bitcoin transactions should be considered as pseudo anonymous.
Why are Bitcoin transactions not fully anonymous?
For sending or receiving Bitcoin, addresses are a must. This works like a token for one-time use which comprises of a series of random letters and numbers. There are times when Bitcoin users may state their name with public addresses. When you use private Wi-Fi connections your identity can also be tracked. Bitcoins are sent to another person much in the same way as you will be sending an email to that person. Since Bitcoin transactions are decentralized and individuals will exchange in the absence of intermediaries, the transactions must be recorded on public ledgers. These can therefore be viewed by everyone and the online ledger is the blockchain.
So, Bitcoins are never completely anonymous, they are essentially pseudonymous. The addresses used are basically pseudonymous addresses; had the real identities of the people been revealed it would be possible to see their individual transactions all the time. The pseudonymous addresses used in Bitcoin transactions are kept in the blockchain. Like everything that is digital, cryptocurrencies will also invariably leave behind a trail. So, it is necessary to have a unique address for Bitcoin transactions.
How can you protect your Bitcoin transactions?
Instance of cyber breaches are so common these days that it has become essential for people to be aware of and to get prepared to tackle such situations. You may have invested a fortune in the latest hardware for Bitcoin mining but then a silly error causes you to lose it all. Perhaps the easiest and most effective way to protect your money and information is to install and use a VPN. You can install a VPN on all your devices and use it every time you are online. You will find many options for the VPN and selecting one for yourself may seem challenging at first. You can take help from the review sites to identify the best kind of VPN for your security and computing requirements.
How does the VPN work to protect your data?
The VPN stands for a Virtual Private Network and it establishes a secure network inside another network. This works like a bubble, isolating your browser sessions from that of the others. As Bitcoin users you can greatly benefit from a VPN. For instance, there are occasions when you made need to use a public Wi-Fi. This is common when you must work outside your home or you are in the office and you need to get connected online. You may also have to make use of the Wi-Fi when you are eating at a restaurant or drinking coffee in the neighborhood café. While all these networks may be super convenient for you they will never be completely safe. These are always the favorite targets of online thieves and scammers who are looking for ways to get hold of your personal information.
When you are making Bitcoin transactions online, you cannot afford to expose your private data to others, knowing about these vulnerabilities. You will want to ensure that the data is completely secure and well outside the reach of people who are looking to steal it. It is here that the VPN protects you by making a small space for you within a public network so that this is completely private and can only be accessed by you. It is isolated from the public and it offers you a special VIP spot for you to enjoy a hassle-free and totally secure browsing experience.
Another big advantage of using the VPN is that it will let you move your IP so that it is not in the same place for a long time. This is very crucial when you are mining Bitcoins. The VPN will ensure that the IP moves so that you are never caught in a single location for long. This means you can even alter the country where the session is being carried out. You can thereby link to other websites which may be location-locked otherwise.
There are many techniques which will help you improve anonymity of transactions in cryptocurrencies. Some ways are by maintaining many wallets, performing multi-input transactions, using mixed services for trading Bitcoins and using e-wallets for masking original owners. But these efforts will not succeed if you cannot stop the stores or retailers which you are working with from linking your identities to the Bitcoin addresses. This is why the VPN is your safest bet to protecting your privacy when trading in Bitcoins and other cryptocurrencies. The VPN will encrypt all traffic going out from your PC during financial transactions. It will allow users to buy products anonymously without showing true IP addresses.