Dave Miller – Tech Enthusiast & Security Expert – January 8th, 2022
Governments around the world, including those in the United States, India, China, and Europe, have expressed skepticism about cryptocurrencies. Until a few years ago, Bitcoin was promoted as the currency that even the world’s most powerful spy services couldn’t follow – but that may not be the case at all. Since as far back as 2015, when the Silk Road’s founder was sentenced to life in jail for selling $1 billion worth of illegal drugs, evidence shows differently. Investigators can still track the money.
To some extent, even the most secret cryptocurrencies such as Monero, DASH, and Verge can be traced. This is due to the fundamental properties of the blockchain technology. There is a ledger for every single transaction, and that ledger can be accessed by anyone.
Since its inception, the digital currency known as Bitcoin has been associated with the idea of a decentralized, anonymous payment system. Bitcoin, on the other hand, is possibly the world’s most open payment system.
With this in mind, can Bitcoin and other crypto wallets be tracked? Could you possibly get your crypto wallet hacked? Read more to find out.
Most people are unfamiliar with Bitcoin’s extraordinary amount of transparency. A permanent record of every Bitcoin transaction is maintained on the Blockchain. The only information needed to determine where bitcoins are allocated and where they are transmitted is a Bitcoin address.
Can crypto wallets be tracked? Well, the crypto wallets of each user generate their own private addresses. After they are utilized, addresses become corrupted by the history of every transaction they are involved in. The balance and transactions of any address can be viewed by anyone. Unless someone else knows your wallet address, no one can really tracked your transactions on your crypto wallet.
You should not share your Bitcoin addresses and should limit the number of times an address should be reused to reduce getting your crypto wallet traced or tracked by people who are hovering over the public blockchain.
Whenever you receive a new Bitcoin payment, you should create a new Bitcoin address to safeguard your anonymity. It’s also possible to have many wallets, each with a different set of features.
Bitcoin addresses you possess and what you do with them are hidden from the people that send money to you. Keeping this in mind is arguably the most crucial piece of advice that I can give you.
It’s a bad idea to post your Bitcoin address on a public website or social network unless you intend to take public donations or payments in full openness.
If you want to do this, be in mind that any monies transferred to another address using this address will be noted on the explorer section of the Blockchain. It is also a good idea to keep your Bitcoin addresses private by not posting information about your transactions and purchases online.
While your IP address is not going to be publicly displayed like your wallet address and the amount of crypto you are sending/receiving, you shouldn’t assume that your IP address is completely hidden from the public. As said by Gavin Andreson (lead developer for part of the Bitcoin project in the early 2010s):
As a result, pinpointing the source of any given transaction can be challenging, and any Bitcoin node can be mistaken for the source of a transaction when they are not. In order to prevent your computer’s IP address from being discovered and getting your crypto wallet from getting tracked then hacked, you may want to use a tool like Tor to hide it.
It’s possible to transmit and receive the same amount of Bitcoin or crypto using different Bitcoin addresses through a service known as a “mixing service” which can significantly lower the changes of your crypto wallet getting tracked by an unknown user. It’s vital to keep in mind that the legality of utilizing these services may differ and be subject to different legislation in different countries.
Additionally, you must have faith in the people administering these services to keep your money safe from theft or loss, and to not maintain a record of your requests. It is possible to disrupt the traceability of minor transactions using mixing services, but it gets increasingly difficult to accomplish the same for larger transactions.
Much advancement in privacy protection is on the horizon. For example, there are ongoing efforts with the payment messages API to avoid contaminating many addresses at the same time during a payment.
Over time, additional wallets may incorporate Bitcoin Core change addresses. Graphical user interfaces might be improved to make payment request elements more user-friendly and prevent the duplication of addresses.
Other potential privacy extensions, such as the ability to link the transactions of unrelated users, are also the subject of ongoing work and investigation.
It’s impossible to control the supply of a cryptocurrency or prevent your crypto wallets from getting tracked by unknown users, because number one, all transactions are on the Blockchain which is made public, and secondly because there is no single individual, company, or government that has the power to influence the supply of Bitcoin. Despite this, most countries are fine with the idea of “bartering” for goods.
Three silver plates could be exchanged for a golden bulb. Similarly, one bitcoin may be exchanged for six laptops from a friend. Transactions are recorded on the blockchain, a ledger of all Bitcoin transactions from the beginning.
This ledger is not centralized, a complete blockchain copy is stored by all Bitcoin participants (miners) and crypto exchanges.
There is a problem with assessing sales tax or income tax because it is difficult to keep track of barter transactions and determine their true value. Because of this, these kinds of transactions are increasingly being conducted in India’s “black money market,” which is a term used to describe the informal economy. In addition to avoiding taxes, the usage of untraceable transactions could be utilized for unlawful purposes.
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Dave Miller is an IT Consultant for Online Cloud Security and has over 7 years of experience in the Information Technology space. He also specializes in repairing laptops & computers. In his spare time, he loves to talk about new technologies and hosts monthly IT and Cyber Security meetings in the Houston area.
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