The naming of cryptocurrencies is spot-on. As well as being based on blockchain, an unhackable technology based on creating a secure, decentralized ledger of transactions (and thus encrypted), ‘crypto’ literally means ‘secret’. Part of the purpose of cryptocurrency is to keep financial actions and transactions hidden. While it’s challenging to be entirely anonymous in the information age, cryptocurrency allows you limited anonymity. The transaction or digital foortprint of the cryptocurrency used does not include your name, address or email anywhere.
DISCLAIMER: It is important to note that in almost every polity in the world, hiding cash constitutes an illegal act, especially if it is performed to enable tax evasion; always ensure that you’re trading in line with laws in whatever country you live in, and are trading with, and seek advice from a cryptocurrency-experienced lawyer or financial advisor if you are unsure.
A user with a lot of cash they wish to hide can buy Bitcoin then use ‘mixers’ to hide the footprints of the original transaction. Bitcoin mixing involves the use of several addresses to create a complex web of transactions with the aim of breaking traceability and possibly erasing any links to a user, keeping ownership with one individual across many cross-traded accounts.
First, a user generates numerous temporary public addresses on their HD wallets. Then, she swaps the coins with others in their wallet of the same value. This masks the trail using several public keys. However, this is a form of laundering which may well be illegal in many locations.
People are buying cryptocurrency on exchanges using the Tor browser in particular. Tor – standing for ‘tiered onion routing’ – is a system which masks users’ IP addresses through a distributed, randomized network of multiple connections and IP addresses, and therefore allows cryptocurrency transactions and the final destination of coins.
To get cryptocurrency, one may access the Tor network and use it to mask their identity, including their IP address. They then register for free anonymous emails, using a service like hushmail to avoid leaving a footprint, and when opening accounts at exchange sites, they use the anonymous email addresses they have created.
From here, they buy cryptocurrency and use a service like blockchain.info to mix the coins. The original transaction is hidden, and no one is likely to link them to the anonymous hushmail emails. This allows the transactions to be hidden.
Since Bitcoin does not offer the privacy some people desire, other coins with superior privacy protocols are catering to this need. Now you can send and receive money anonymously through cryptocurrencies like Monero and Dash. In addition, many users who want to hide their money avoid buying from sites that use KYC and prefer P2P exchanges that accord them anonymity.
However, anyone with access to your public key may be able to use it to link your IP address. This would inevitably allow them to track your activities. Despite this, cryptocurrencies offer unparalleled options for staying anonymous and hiding transactions. Various circumstances may force an individual to seek complete anonymity and therefore attempt to hide their money or transactions. Cryptocurrencies offer such possibilities through their decentralized nature.