Bitcoin was originally thought to be fully anonymous and in its early days it probably was. However, as most moved from mining BitcoinCT r: 8 to buying, systemic entry points, or exchanges, sprang up.
As a ledger history was created, known addresses, often those belonging to Bitcoin exchanges , became, in effect, de-anonymising tools. Financial regulation of Bitcoin exchanges
When Bitcoin became more prominent and popular, regulators took enforcement action.
The community’s pushback secured no regulation of the protocol itself, but Bitcoin exchanges were forced to comply with numerous financial regulations .
Although Bitcoin addresses are made of random letters and numbers, each address is unique. Once ownership of the address is revealed, everyone can see all the transactions it performed.
If, therefore, that address received or deposited to a known illegal or even undesirable (as regulators deem it) service provider, exchanges may freeze the account or deny service as well as perhaps or rather likely share data with third parties.
If all exchanges or service providers share their data with a central entity, then it may be possible to track most transactions with reasonable confidence as the centralized points (exchanges or service providers) shed light on what likely occurred when the transaction is onchain. Retaining privacy
One method to retain privacy is to use a new address every time a new transaction is made.However, one could easily assume such action was performed, especially if subsequent transactions re-inforce the assumption in one way or another.There are mixing services, like coinjoin, which pools different amounts, mixes them all together and sends them off to different addresses, as well as other methods.However, would non-technical users be able or willing to spend time and effort into employing such methods?Should they, therefore, be incorporated in the protocol itself and if they are, how would regulators, which are currently […]
