Bitcoin doesn’t make payments anonymous, just that they’re really hard to track. Using Bitcoin to make payments doesn’t mean your transactions are hidden from the world. Since bitcoin is based on blockchain, which is a public ledger, the address of your crypto wallet is visible to everyone. In the early days, criminals used Bitcoin as a safe haven, thinking that Bitcoin was anonymous and that transactions could not be traced.
However, as organizations and the public gained a better understanding of blockchain technology, it became clear that Bitcoin’s public transaction ledger was, in fact, a goldmine of information for authorities. Thanks to the algorithm structure, everything that happens in the Bitcoin world is traceable. Some online services called mixing services offer to mix traceability between users by receiving and sending the same amount using separate Bitcoin addresses. In the original Bitcoin whitepaper, it was recommended that users use a new address for each transaction, to avoid being linked to a common owner.
It would have taken hours to track bitcoin transactions using a standard browser because at each layer there are multiple wallets in between. In addition, you may also want to be careful not to publish information about your transactions and purchases that could allow someone to identify your Bitcoin addresses. Criminals, who often operate in hidden places on the Internet, flocked to Bitcoin to do illicit business without revealing their names or locations. One of the most critical use cases of Bitcoin transaction tracking is preventing bitcoin money laundering and identifying criminal activity.
Increased Bitcoin trading in foreign countries, such as China or Venezuela, could mean pressure on domestic fiat currencies. Bitcoin operates with an unprecedented level of transparency that most people aren’t used to dealing with. Criminal activity can be stopped in the pass with tools that match customer data to bitcoin transaction histories. As blockchain is permanent, it’s important to keep in mind that something that cannot currently be traced may become trivial to track in the future.
It is also important to note that since you can view all transactions taking place on the Bitcoin network, multiple Bitcoin addresses can be grouped together. Therefore, it is critical that companies understand the value of user privacy when implementing bitcoin compliance solutions and tracking technologies.
