One of the major selling points of Bitcoin is the confidentiality of the transactions. Unlike other electronic transactions like PayPal, you can open a Bitcoin wallet without providing your name, age, or any other identifiable personal information. The clear-cut and anonymous process of opening a Bitcoin account often leads to a puzzling idea that Bitcoin transactions are completely untraceable.

While Bitcoin transactions do not include any information that can reveal your personal data or lead to identifying who you are, each transaction can however be traced to a certain extent.

Blockchain is a Public Ledger and Anyone Can Read It

Since Bitcoin, like most other cryptocurrencies, uses a technology called blockchain that uses a public ledger to store each transaction, all Bitcoin payments and the Bitcoin wallet addresses are public knowledge. Consequently, if anyone can link you to your Bitcoin wallet address, the individuals can eventually trace all of your Bitcoin transaction history associated with that particular wallet.

If you have ever published your Bitcoin wallet address on your personal website asking for payments or donations whether you have accepted or sent a payment to someone who knows who you are, then there is a good chance that anyone who knows your wallet address can figure out your transaction history.

There are several websites like moreover, where you can directly input a Bitcoin wallet address and get all the transaction history associated with that wallet. Although you will not get the identities of whoever owns these wallets, a single identity breach can help a sophisticated user figure out who owns and operates which wallet.

Buying Bitcoin with National Currency Can Reveal Your Identity

If you ever opened an account with any exchange that sold you Bitcoins and conduct an exchange of any national currency, then your identity can be revealed or accessed by authorities and linked to your wallet due to the universal money laundering regulations. Your exchange or transaction is bound to obey the law of the land where you operate from, therefore must keep track of the transactions that happen with fiat currencies like US Dollars.

However, if you buy Bitcoin from an exchange that does not keep your personal identification data and accepts cash, then you can still get away with buying your coins without revealing your identity.

Use Mixers to Keep Your Bitcoin Transactions Anonymous

Knowing each and every transaction of a Bitcoin wallet does not automatically reveal the identity. If you know how to keep your Bitcoin wallet addresses a secret, then you can still take certain measures to protect your identity.

Once you buy the Bitcoin from the exchange, you can use something called a mixer or tumbler service to break the link between you and the Bitcoin you own. The idea is that you would keep a keep your Bitcoin wallet totally anonymous and move your money to it from a publicly identifiable wallet via a mixer.

When you send your Bitcoin to a mixer, they will transfer it to your second wallet, which is anonymous, for a small fee. However, the problem with using traditional mixer service providers is that if they keep a record of these transactions, they can be forced to reveal your identity.

Besides traditional centralized mixers, you can also use a new form of mixers called CoinJoin to make your Bitcoins transactions totally anonymous. CoinJoin effectively pool your transactions to multiple users together in such a way that it would make it impossible for a third party to identify who is getting paid from your Bitcoin wallet.

Remember that Bitcoin does not have any in-built encryption mechanism that protects your transaction records from becoming public knowledge. As your Internet Service Provider and anyone lurking over your WIFI network can see your online activities, they can quickly gather enough information to figure out which websites you are visiting and to whom you are paying with Bitcoin.

As an evolving technology, Bitcoin users have long enjoyed anonymous transactions, but law enforcement agencies are slowly catching up with the technology. However, Bitcoin enthusiasts are also coming up with bold new ideas to keep your transactions on the lowdown, and it has turned into a cat and mouse game over the last few evolved years.

While maintaining the total anonymity of your transactions can be a hard task to accomplish, if you do not intend to use Bitcoin for any illegal purpose, then you do not have to worry about it. Nonetheless, there are several ways to keep your transactions anonymous if you spend the time and effort to ensure nobody knows how you conduct your businesses online and off the radar.