Cryptocurrency is gaining traction owing to its decentralized model that secures and verifies transactions. There is that misconception, though, that the likes of Bitcoin currency are an anonymous way of moving money. Well, the blockchain keeps all the records of transactions from one address to another. The blockchain, therefore, offers transparency, making it possible to track the bitcoin transactions. Thus, information based on transaction hashes, block numbers, and Bitcoin addresses can be tracked! That said,’ pseudo-anonymity’ is what deters bitcoin tracking.
Once you buy a wallet, you get an address that allows you to receive Bitcoins. It is a unique combination of numbers and letters. As long as nobody connects to your Bitcoin address and you do not engage in illegal activity, you will preserve your personal and transaction details anonymously. But, as soon as you give someone your Bitcoin address or a link to your wallet, they can access your transaction history.
In other words, Bitcoin transactions aren’t fully anonymous. For instance, you will need to carry out a Bitcoin exchange from your wallet to the exchange wallet. Of course, the exchange wallet is linked to your identity, and someone who knows that will link your address to the exchange wallet hence will be able to know your identity. Moreover, if you purchase goods, you will be required to reveal your identity to receive them. You will be required to use your address, and once you use it, all the other users in the blockchain will be able to access the history of all the transactions and the balance.
Think of it this way, if Bitcoin and blockchain technology remains purely anonymous, this could make it a powerful tool for illegal transactions. In that regard, some developers have come up with blockchain analysis software as a transaction tracker of Bitcoins’ movement.
Financial data is sensitive, but as much as the transaction tracker can intrude into your privacy, several benefits are attached to it:
· The blockchain analysis software has helped authorities like the FBI investigate crimes related to cryptocurrency, such as illegal earning. They can link the transactions to real criminal identities.
· Besides getting hold of criminals, the blockchain analysis software has helped banks and other financial institutions comply with the Know Your Customer and Anti-Money Laundering policies. Well, many investors are trading in cryptocurrency. The financial institution can investigate them through their transaction statement to be sure that their money is not illegal.
· The software analyses the market trends giving investors insight into the value of national currency long before the official financial statements are made.
· The transaction trackers also help check if the cryptocurrency trading forums are operating as usual. For instance, if you want to buy bitcoins, you will know how long the transaction will take before undertaking it. This is important because if the transaction is urgent, you can choose to rely on a different provider.
· The trackers also help in the performance assessment of a crypto portfolio.
· In case you send your Bitcoin to the wrong address, the transaction trackers will help you identify the address that received the crypto.
Now, many people still do not know how to buy Bitcoin legally if you want to start trading. For starters, you will need to get a digital wallet for the future storage of Bitcoins. The bitcoin has public and private keys. The public key is where the Bitcoins are withdrawn from and deposited to. This is the key that appears in the blockchain ledger.
On the other hand, the private key is used to authorize transactions and is required to trade the Bitcoin i.e., buying and selling it. The private key should be secret and encrypted with a strong password. It is also essential to choose a secure wallet for storage. Registration for digital wallets has an Anti-Money Laundering policy. Therefore, personal documents like social security numbers are a requirement for verification and identity. Then once you obtain a digital wallet, you can now buy bitcoin with credit card or through bank transfers on the Bitcoin exchanges. Once you buy the bitcoin, they are transferred to your wallet. Always remember to use a secure wallet and a secure network connection to prevent hacking.
Bitcoin was launched back in 2009. As a decentralized digital currency, it is overseen by one administrator. Since its launch, the Bitcoin has been the forefront cryptocurrency, joined later by the likes of Litecoin, Ethereum, etc. Investors and some governments have been swarming to buy and sell the Bitcoin, all with strict precautions due to uncertainty on the currency’s security. But, is it possible to hack Bitcoin?
Well, the security of the Bitcoin has been enhanced since it was developed. First, all the Bitcoin transactions are recorded and verified via a digital public ledger known as the blockchain. The blockchain technology is reviewed continuously by the Bitcoin users, which makes it impossible to hack.
On the other hand, Bitcoins are held in Bitcoin wallets, and the trading of the crypto is through digital currency exchanges. The Bitcoin developers always work towards the improvement of the wallet’s security. Moreover, during the transactions, two-factor authentication is used as a security measure. However, this does not guarantee total security because if a hacker has access to the two authentication factors, they can transact. Bitcoin users also use private keys only known to themselves to access their bitcoins. As much as the developers have put security measures, it is upon the Bitcoin user to implement them. For instance, you should avoid sharing private keys and protect your cybersecurity.
Bitcoin has been gaining popularity around the world, with many investors and governments jumping to the crypto wagon. The popularity of this crypto has not only been enhanced by privacy and security but also by profitability. The developers of Bitcoin have implemented security measures like blockchain technology and two-factor authentication to create a solid decentralized currency. There are also many secure wallets where you can store your Bitcoins, to enhance crypto and the transaction safety.