So one of the many questions we get asked here in the comments is can cryptocurrency be traced? or can cryptocurrency transactions be traced.
There are many many kinds of miss information floating around the internet and a lot of people presume that bitcoin is this pseudo-anonymous currency that kind of floats around and can be used for drugs and dodgy dealings and horrible things. And of course back in the day eight-nine years ago there were of course people that used it for those purposes because the ecosystem itself was a little bit less developed than it is now and everyone thinks that because you don’t have a name with Josh and Josh’s Bitcoin wallet connects it that there isn’t a way to track those type of transactions so everyone who’s dealing in bitcoins totally anonymous and he can get away with everything.
Well I’m here to kind of bust that bubble, unfortunately, that is not true it has never really been true and actually we’ve seen a lot of instances historically as people getting busted because they’re using Bitcoin.
How Bitcoin Transaction Really work?
Can cryptocurrency be traced? I have said Bitcoin and I send it to another wallet address if I wanted to move those coins around the blockchain the kind of posh spreadsheet that underpins Bitcoin and all the other cryptos and effectively tracks every single transaction in that journey. So if I’ve moved my coins from here to here you’ll be able to follow that transaction. So whatever I do with any of my coins within the ecosystem of crypto is entirely trackable on a public blockchain like Bitcoin.
Can cryptocurrency be traced? There are of course some cryptocurrencies that have specifically been designed for anonymous transactions. So even though Bitcoin itself is a public ledger there are some that have private features and there are some in effectively deleting the previous transaction every time a new transaction is created. Now there’s a range of reasons why that’s the case and there’s always going to be some people that want to hide their identity in this type of environment and in general and there are many companies out there today that offer forms of anonymous payment. There are traditional companies that were that use pounds of pence or dollars and euros that will put your payment through something else on your bank specifically to avoid something coming up on record as what it is.
So this happens from a range of different websites from adult entertainment to different ecosystems where people have arguably legitimate reasons to keep their identity anonymous. so I’m not here to kind of judge the morality of the reasons behind people wanting to or not wanting to do something. Can cryptocurrency be traced? The technology for being completely anonymous within crypto does exist how many times have we had a builder or an electrician or you know insert kind of person of choice want a cash payment rather than doing things through the books?
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There are many reasons why people would do that and again it’s not always disingenuous, but it’s the case of trying to use the systems that we have in new ways. So there’s always going to be people that try to do things anonymously. Can cryptocurrency be traced? There are always people who are perfectly happy to be above board and transparent and the technology that is the medium whether it be cash in an envelope or whether it be an anonymous cryptocurrency just changes as technology does but fundamentally you shouldn’t ever be scared or worried about this space in “ooh cryptos dodgy it’s anonymous it can be used for bad things”. That’s a very very out-of-date kind of thought process many of the big bank’s governments and international institutions now recognize this form of the asset class. And in order to kind of not enter this space because of some negative misconceptions would be a really silly thing to do.
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If we were to say money is bad because someone once uses it to buy drugs that would be a stupid thing it doesn’t make cash intrinsically bad people will of course always have negative motivations for whatever it is in life irrespective of the medium and of exchange.