Bitcoin Privacy Basics

Bitcoin is often described as anonymous. It isn’t — at least not by default.

Every Bitcoin transaction is permanently recorded on a public blockchain. Anyone can see every transaction ever made, the amounts involved, and the addresses that sent and received. What the blockchain doesn’t record is names — but addresses can often be linked to identities through other means.

If you bought Bitcoin on an exchange with KYC, the exchange knows your identity and your Bitcoin addresses. If you’ve shared a Bitcoin address with someone publicly — on a website, in an email, in a forum post — that address is linkable to you. Chain analysis companies exist specifically to trace Bitcoin flows and link addresses to real-world identities.

This doesn’t mean Bitcoin is useless for privacy. It means privacy requires deliberate practice.

A few basics that serious holders apply:

Use a new address for each transaction. Most wallets do this automatically. Reusing the same address makes it easier to connect your transaction history.

Be thoughtful about where you share addresses publicly. A Bitcoin address posted on a public forum links your transaction history to that context permanently.

Consider how you acquired your Bitcoin. Bitcoin bought on a KYC exchange has a paper trail from the start. Bitcoin acquired peer-to-peer without KYC does not.

Run your own node. Querying someone else’s server with your addresses reveals your holdings to that server. A personal node queries the network directly.

Privacy isn’t about hiding wrongdoing. It’s about maintaining the same financial discretion that cash has always provided — and that most people assume their money has.

Tomorrow: don’t trust, verify — what DYOR actually means in practice.

— The Daily Bit