Privacy is a right for everyone, and you don’t want your bank account to be visible to everyone. This applies also to Bitcoin. Here are a 10 tips on how to be more anonymous when using bitcoin.
1# Don’t tell anyone you own Bitcoin
The first tip is obvious, but do not tell people you have Bitcoin. There are plenty of examples of Bitcoin owners who have been hacked or visited by criminals.
2# Not your keys, not your coins
It’s a well-known statement among bitcoiners: not your keys, not your coins. As soon as a third party manages your BTC for you, you have no privacy.
This third party knows what you have and in most countries third parties are obliged to share this data with the government and investigation services. With a wallet, it’s important that you have full coin control over your Bitcoin.
You can then label every bit of Bitcoin (UTXO’s) yourself. This gives you the advantage of knowing exactly where a particular Bitcoin is sent from. From an exchange, a brokers, another wallet, a miner etc.
3# Anonymous online
It’s a basic rule to obtain more anonymity online. Create an online identity that is separate from your real identity.
This way you can participate in the socials without giving away personal data. This means that you don’t have any personal data, such as a phone number, registered with an account. You can solve this by using a separate sim.
4# Use encryption
There are plenty of tools available whose data is encrypted. It prevents you from leaking extra data unnecessarily.
5# Use Tor / VPN
Once you are online, your provider will be able to see all the websites you visit. For example, they can see that you are searching on Bitcoin or connecting Bitcoin wallet to your laptop.
You don’t want your IP address to be linked to your Bitcoin related information. In that case, browsing with Tor will help, because in that case, your ISP will not be able to track your traffic. For this reason, use a mobile wallet that includes Tor for additional protection. Think Samourai Wallet, Blockstream Green or Phoenix.
A VPN works differently. It gives you more privacy that allows you to ‘tunnel’ your internet traffic to another server in another country. This means that your internet provider can’ t spy on you. An additional problem is that you have to trust your VPN provider.
One of the options is Mullvad from Sweden, who accept Bitcoin as a payment method and do not ask for personal information when registering.
6# Buy Bitcoin without KYC
Once you purchase Bitcoin through a know-your-customer procedure, you must leave your personal information. Think of your name, address, driver’s license, a selfie, etc. These laws and regulations are interesting for hackers to steal and sell personal data.
Whether you use Coinjoin or not, if you buy Bitcoin with KYC, it’s fixed forever. A handy site is kycnot.me which keeps a list of brokers who don’t ask for KYC.
This means buying Bitcoin face-to-face, but that also has some risks. So wonder how much privacy weighs on you. Every solution has its drawbacks. You often pay a premium fee to buy ‘KYC-free’. In addition, these marketplaces are not liquid and there is little attention paid to the user interface.
7# Your own node
You can’t send or receive anything on the bitcoin network without a node. And if you don’t have a node yourself, you trust someone else.
Suppose you use Trezor software to connect to your hardware wallet. So every transaction with that wallet goes through Trezor’s node. They know the balance of your address and to which recipients/addresses you send the BTC.
With your own node, you have your own copy of the blockchain, your own copy of the Bitcoin ruleset, and you are not dependent on third parties to connect to the protocol.
NeedFUD has also installed its own Node, we put MyNode on a Raspberry Pi4. It really isn’t difficult to run your own node, by the way, there are plenty of toturials and telegram groups where there is always someone willing to help you when you have questions.
8# Off chain transactions
Just like with cash, making Bitcoin offchain makes it less detectable. There are two ways not to use the Bitcoin base layer.
- Use Opendime, a USB flash drive created by Coinkite. It actually works the same as handing over a banknote.
- Use Lightning Network. After opening a channel, you can pay your peers as much and as often as you want without it being captured on-chain. But opening and closing a channel still happens on-chain.
That way you still leak information. The LN is also still developing, we advise not to set up too many funds there.
The Bitcoin blockchain is completely public, so you can follow your Bitcoin through an address. More and more companies are searching the blockchain for information.
A Coinjoin transaction masks the transaction data. CoinJoin is a way to anonymize your use of bitcoin. The goal of CoinJoin is simple: to protect the privacy of users who make a bitcoin transaction.
To increase your privacy various parties work together. During a CoinJoin different users agree to ‘mix’ their bitcoin. During the mix, you throw all transactions into one pile, and huddle them together. This makes it more difficult to follow your bitcoin on the network.
Everyone who participates makes their own bitcoin transaction. And at the end all BTC arrive at the right address. However, the transaction does not leave a clear trail to the bitcoin address it came from, this way you make sure there is less information available about your addresses and transaction history. However, with a Coinjoin you don’t hide the fact that you bought Bitcoin from Exchange A or B.
One of the easy ways to work with Coinjoin is the Samourai wallet, currently only available for Android. iPhone users can use Joinmarket as an alternative.
10# Living without Google?
Surveillance systems are made possible by the cooperation of tech companies from Silicon Valley. Several studies have shown that they share user data with governments and investigative agencies.
This is not limited to Facebook or Google, but Apple is also known to freely leak data (if requested). Requests from the government can now certainly be a reason to share certain data. Think of tracking down criminal organisations or child pornography networks. But some companies track their users ‘by default’.
Nowadays there are alternatives on the market for iOS and Android devices. Think of Graphene and Copperhead, which are bare Android versions. The big difference: no Google Playstore that keeps track of everything via Gmail.
With alternative appstores such as F-Droid, Aurora Store or direct MOTK downloads, you can still have access to most apps. Also check which apps you really need. Each new app increases the risk of being targeted.