Profile

Is Bitcoin anonymous?

Is Bitcoin anonymous?

Today's question is one that I've been asked so many times now that I thought I should devote a video to the answer. It seems to be a very important question for ...

Transcription

What's up party people? Chris DeRose here, community director of the Counter Party Foundation and today I wanted to answer the question, "Is Bitcoin anonymous?" So this is a big question. I get asked it a lot. It's very important for people seemingly to frame this into like a yes or a no dichotomy. And I don't think that dichotomy exists. I try to explain to people that there's a spectrum of anonymity and that Bitcoin falls in that spectrum. So let's explore that issue.

Bitcoin has a lot of features that make it very auditable. It is, in fact, a publicly auditable ledger. Now, Bitcoin also has a lot of functionality that allows one to murky the identity and the relationship that they have with any transaction. Certainly, though the transactions are identifiable, in some terms there's no actual identity that's associated with that transaction. There's a number of a sort that's your public key but you don't necessarily have any identity attached to it. Now, it's important to note that with that public ID, yes, maybe it came from a coin based account and yes, maybe it came from a circle account, but over time these things get certainly transacted upon.

You write transactions from other transactions, you write checks from checks if you will and so as you do this, as the process of spending becomes further and further from these sources, there's a certain statistical degree of uncertainty that's introduced in terms of where that money's coming from. There are, in fact, tumbling services that take advantage of this extensively. These tumbling services, what they will do is join a bunch of transactions into a single pile and then explode it on out in more or less proportionate terms to the peoples that were [inaudible 00:01:11]. In doing so, it really makes the issue of what the identity is really murky. Now is that to say that it's anonymous? No. Another part of this question that should really be explored and considered is, "who are you trying to hide the identity from?" Are you trying to hide the identity from an ex-spouse, or are you trying to hide it from the NSA.

So if it's somebody that is a little bit more local, the cops or your ex-spouse or something, at least we don't have all of the resources required to tap into every part of the network, perform statistical analysis on every part of the network. If you're hiding from the NSA, well they have a lot of those resources. I think that even to the degree that the NSA's resources tap into Bitcoin, there's still a lot of uncertainty and only statistical ability to identify transactions. I think that itself is based on the public ledger contents. There are in fact IP addresses from which transactions broadcast. There's that degree of identity as well but Bitcoin does have really good support for tour [SP], so depending on your confidence in the tour system, you that is an option to obscure identity.

So you can see that there's all of these nuance sort of fragments to the anonymity question and I think that the best succinct answer to "is Bitcoin anonymous" is, it is more anonymous than credit cards but less anonymous than cash money. So that's probably as good an answer as you can get in a TLDR but we're still exploring these things and so a lot of people are putting a lot of time into both sides of this equation. It will be a cat and mouse game for a good while. So, do you have any questions about Bitcoin? Do you have any questions about the anonymity of Bitcoin? Go ahead and ask me in the comments below or tweet me on Twitter @derosetech. I appreciate you watching the video and if you like this, subscribe to my channel. Later party people.