Are Bitcoin Transfers Traceable?
December 15, 2021

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One of the most popular and resorted to cryptocurrencies in the world when it comes to purchasing and trading, Bitcoin has often found itself in the loop when it comes to the security of transactions and transactional information. No wonder, many investors often find themselves seeking answers to the query – are Bitcoin transfers traceable – to be certain that their transactions are treated with promised levels of anonymity and safeguard.

The truth is that using Bitcoin for payments does not mean that your activities will remain hidden from the world, but depending on the medium you choose, they can remain safeguarded from cyberattacks to an impressive extent. All over the world, cryptocurrencies have constantly come under the scanner because of their unique decentralized nature that takes away intermediation by banks and regulations by financial authorities. Until a few years, Bitcoin was looked down upon with heavy suspicion, often touted as the “underground currency” that even the world’s best intelligence agencies could not track. But that has changed with time.

Why? Let’s delve into some basics first.

Bitcoin and its Anonymity

The decentralized digital cryptocurrency Bitcoin was launched in January 2009 by a mysterious and unidentified individual by the name of Satoshi Nakamoto. For a long time, Bitcoin was perceived as an opaque medium for payments, with no government organization having any control over it. This was also the reason behind several criminal attempts using the network, which were, however, curbed with the help of researchers and Bitcoin experts in no time at all.

The truth is that Bitcoin, like other cryptocurrencies, is built on the blockchain, which is a public ledger. Therefore, Bitcoin addresses involved in a transaction, created privately by each user’s wallet, are stored as sensitive information on this ledger, which law enforcement authorities can refer to when needed. Even the most private of cryptocurrencies like Monero, DASH, and Verge, leave alone Bitcoin, are traceable to a sufficient extent, due to the public nature of the blockchain.

The Traceability of Bitcoin Transfers

Just because cryptocurrencies like Bitcoin do not have a central authority influencing their supply or value, many people often perceive them as invisible and untraceable, which is not true. All Bitcoin transfers are recorded on the decentralized public ledger, a complete copy of which is stored by all Bitcoin participants and exchanges, with details such as amount, time, and wallet addresses sending and receiving the Bitcoins. The problem, however, is not that this data can be accessed by law enforcement authorities. Concerns arise when such sensitive information is visible publicly and comes to be misused by cybercriminals.  

As Bitcoin does not intrinsically require a Know Your Customer (KYC) identity proof on several crypto exchanges, many criminal activities have found a haven for themselves under the garb of crypto transactions. Moreover, crypto exchanges may mask sensitive personal data of crypto users, but put out all the transactional information, including balance and transaction history of any given address.

Bitcoin transfers can be traced both manually and using software technology. It could take from a few hours to a few weeks to manually trace a Bitcoin transfer’s wallet address and linked exchanges or payment methods, like credit cards. On the other hand, software tools have permitted instantaneous detection, sending in all details related to a transaction within seconds. Suffice it to say that if such tools are left in the hands of cybercriminals, it could become extremely difficult for investors to keep their finances and sensitive personal information safeguarded.

OTC Desks – The Best Way to Protect the Privacy of Your Transactions

With such dangers around privacy and safety of data lurking around, one question emerges as most alarming – how to accept Bitcoin as payment for business? Technology has, in fact, eroded our privacy protections in more ways than you can imagine. With the proliferation of crypto exchanges, the current situation is such that there is no way to even determine the number of exchanges operating at any single instant.

Why Use an OTC Desk instead of a Crypto Exchange?

Crypto exchanges might have emerged as a popular means for trading and transfer of Bitcoin, but they come with several drawbacks. First, even the biggest exchanges like Coinbase, Kraken, or Binance allow only a limited transaction volume on their platform. Secondly, these transactions are highly prone to external attacks and data theft, as is evident from the long history of poor cyber safety and myriad attacks on these exchanges so far. Crypto exchanges manage to mask sensitive personal information of investors, such as their names and location but are unable to conceal transactional information.

On the other hand, OTC desk bitcoin trading is a much safer and more reliable alternative. Firstly, there are no intermediaries involved in OTC desk trading, in sharp contrast to cryptocurrency exchanges, which means there is a lesser risk of your information getting compromised in any way. OTC desks enable direct trading between the two involved parties, meaning there is no middleman with access to your sensitive data. Even though trades start at comparatively high volumes – generally from $25,000 onwards – there is complete assurance of safety and security on the platform.

At the same time, investing with the help of an OTC desk bitcoin trading still gives you complete control over your assets, unlike crypto exchanges where you lose custody over your Bitcoins as soon as you put them on the exchange. Investors being left in charge of their digital assets alone means that there is nothing to worry about unless the intention of the other party itself is compromised.

Other Measures to Protect Your Bitcoin Transfers Privacy

Do not go Public with your Address

It is recommended that you do not publish your bitcoin address and wallet details on websites and social media platforms where they are in full public view unless you are planning to receive donations on the address or conducting payments that demand complete transparency. Even if so, it is advisable to move funds from this wallet address to another, which is not publicly disclosed.

Mask your IP Address

Bitcoin, like other cryptocurrencies, functions on a peer-to-peer network, which means that cybercriminals can easily log your IP addresses and listen to transactions. This is why experts suggest that one should mask their IP address using VPNs or proxy networks so that it becomes impossible to trace back to you. These features encrypt and route your internet traffic to other nodes, thus making it difficult to locate your IP address and giving you the benefit of surveillance-free browsing.

The Bottom Line

Blockchain technology has been revolutionary for many reasons, one of the main ones being the transparency they offer to cryptocurrency transactions. However, in many cases, such transparency has become a cause for concern instead, leaving data open and accessible to attackers. To truly ensure the privacy of your sensitive data, it is best to switch to a reliable OTC desk like Secure Digital Markets, where we not only help investors get the best out of their hard-earned money but also assist enthusiasts with the answers they are looking for on crypto investments and OTC markets.

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