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Things You Should Know When Using Bitcoins by Harryola9(m): 3:37pm On Sep 05, 2016 |
Protect your privacy
Bitcoin is often perceived as an
anonymous payment network. But in
reality, Bitcoin is probably the most
transparent payment network in the
world. At the same time, Bitcoin can
provide acceptable levels of privacy
when used correctly. Always
remember that it is your
responsibility to adopt good
practices in order to protect your
privacy.
Bitcoin works with an
unprecedented level of transparency
that most people are not used to
dealing with. All Bitcoin
transactions are public, traceable,
and permanently stored in the
Bitcoin network. Bitcoin addresses
are the only information used to
define where bitcoins are allocated
and where they are sent. These
addresses are created privately by
each user's wallets. However, once
addresses are used, they become
tainted by the history of all
transactions they are involved with.
Anyone can see the balance and all
transactions of any address. Since
users usually have to reveal their
identity in order to receive services
or goods, Bitcoin addresses cannot
remain fully anonymous. As the
block chain is permanent, it's
important to note that something not
traceable currently may become
trivial to trace in the future. For
these reasons, Bitcoin addresses
should only be used once and users
must be careful not to disclose their
addresses.
To protect your privacy, you should
use a new Bitcoin address each time
you receive a new payment.
Additionally, you can use multiple
wallets for different purposes. Doing
so allows you to isolate each of
your transactions in such a way that
it is not possible to associate them
all together. People who send you
money cannot see what other
Bitcoin addresses you own and
what you do with them. This is
probably the most important advice
you should keep in mind.
Unless your intention is to receive
public donations or payments with
full transparency, publishing a
Bitcoin address on any public space
such as a website or social network
is not a good idea when it comes to
privacy. If you choose to do so,
always remember that if you move
any funds with this address to one
of your other addresses, they will be
publicly tainted by the history of
your public address. Additionally,
you might also want to be careful
not to publish information about
your transactions and purchases
that could allow someone to identify
your Bitcoin addresses.
Because the Bitcoin network is a
peer-to-peer network, it is possible
to listen for transactions' relays and
log their IP addresses. Full node
clients relay all users' transactions
just like their own. This means that
finding the source of any particular
transaction can be difficult and any
Bitcoin node can be mistaken as the
source of a transaction when they
are not. You might want to consider
hiding your computer's IP address
with a tool like Tor so that it cannot
be logged.
Some online services called mixing
services offer to mix traceability
between users by receiving and
sending back the same amount
using independent Bitcoin
addresses. It is important to note
that the legality of using such
services might vary and be
subjected to different rules in each
jurisdiction. Such services also
require you to trust the individuals
running them not to lose or steal
your funds and not to keep a log of
your requests. Even though mixing
services can break traceability for
small amounts, it becomes
increasingly difficult to do the same
for larger transactions.
Many improvements can be expected
in the future to improve privacy. For
instance, some efforts are ongoing
with the payment messages API to
avoid tainting multiple addresses
together during a payment. Bitcoin
Core change addresses might be
implemented in other wallets over
time. Graphical user interfaces might
be improved to provide user friendly
payment request features and
discourage addresses reuse. Various
work and research is also being
done to develop other potential
extended privacy features like being
able to join random users'
transactions together. |
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