Is Bitcoin Untraceable Anymore?! It Depends!

By xuanling11 | Crypto Learning | 11 Aug 2021

The benefit of using Bitcoin is decentralized, anonymous, low costs, and secure.

At least, that was the beginning when someone introduced you to Bitcoin.  

However, we want to explore anonymity today. Is Bitcoin actually untraceable?

Before we do, we want to know why Bitcoin can be anonymous.


What makes Bitcoin anonymous?

Bitcoin was built from cryptography, a technique of hiding important information so that only certain people can access that information. It provides a way for two parties to exchange information without revealing their identity.


Anonymously vs. Privacy 

Bitcoin does not protect your privacy. Since privacy is more exclusive that all information will not be revealed and shared in the public domain, Bitcoin cannot hide all information but publish transaction information on the public ledger called Blockchain but that information is disguised as a string of random numbers and letters combined. Therefore, Bitcoin is Puedo-anonymous or Pseudonymous which means there are ways to reveal your identity!


Bitcoin is traceable?!

Not exactly. It depends on when you had your Bitcoin.


Pre the 2014 era

in the early days, it is difficult to store Bitcoin on a “wallet” but put it into your hard drive with text formatted documents. The majority of people may park their Bitcoin in exchange platform Mt. Gox (closed in 2014), BCT China (closed in 2017), and Bitstamp (still operating). 

Silk Road, another Bitcoin black market, was shut down by the FBI in 2013.

There was a total of 13.1 million Bitcoin circulated and many were lost either exchange platform shut down by the government or lost of the private key.

However, those Bitcoin is truly anonymous because there were not many services back then to track Bitcoin transactions and the government was slowly adopted the Bitcoin culture.


After the 2014 era:

Another 6 million Bitcoin was minted and circulated in the blockchain after 2014.  

BitLicense was issued by the New York State Department of Financial Services (NYSDFS) in July 2014 to enforce cryptocurrency regulations. In the same year, Coinbase App was launched in Apple Store. Even businesses gradually complied to register under NYSDFS, the crypto service still did not require customers to submit their identification.


After 2017:

Coinbase was not required to submit a government-issued ID until late 2017 to compile with KYC (Know Your Customer) requirements. In other words, your wallet address is officially linked to your identification which makes the address traceable.

Crimes that think untraceable but got caught

Nowadays, your IP address likely reveals your wallet activities that the FBI will track in case of any criminal activities. One of the recent incidents of Colonial Pipeline ransom was recovered because of the IP address tracking of hackers' computers for the FBI to recover all Bitcoin lost.

In conclusion:

Bitcoin’s pseudonymous transactions may let people think that they can protect their privacy. To some extent, it does make transactions appear to be anonymous if you had your Bitcoin before 2014. However, the majority of Bitcoin transactions are likely to reveal their identity after 2014. Bitcoin is still a viable cryptocurrency to use even though anonymous may not apply in the future.


Photo credit: Click here
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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational

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