Key Takeaways:
- Bitcoin addresses and wallets are not anonymous, and transactions are traceable
- Personal information is easily linkable through the internet, social media, etc.
- Cryptocurrency exchanges are a safe and convenient way to buy bitcoin, but they require KYC (Know Your Customer)
How to Find the Owner of a Bitcoin Wallet Address?
The blockchain is public and stores all Bitcoin transactions permanently in it.
Transactions are traceable, and the identity can be linked to a real person.
You will need personal information from other sources to achieve this. The blockchain gives information about the transactions and wallet addresses, but not about the users itself.
For user identification, different sources with personal information need to be connected to the information from the blockchain. To link a real-world identity to Bitcoin, information depends on how the actual owner deals with his privacy.
If people try to be cautious with their private data, it will be hard to tell who owns a Bitcoin wallet. Most people are not that cautious.
There are some common places on the internet outside the blockchain where it could be easy to connect the Bitcoin blockchain information to personal data.
Personal Data on the Internet
To identify the owner of a Bitcoin wallet, personal information is needed.
This information is easy to gain today because of the internet, social media, etc.
You can lookup a real person through the internet. Then you could just search for every hint of Bitcoin addresses and IP addresses.
If the person posted an address somewhere in a forum, a blog registered on himself or a comment in social media, the address may be easily linkable to that person.
If you would get the address from that person, you could go through the data in the blockchain to see all transaction data related to that person.
When a person would use Bitcoin to buy something from an online shop, real-world personal data is needed like name and shipping address.
The owner should have to use fake personal data to buy through online shops in order to stay fully anonymous. Most people wouldn’t do this effort because it is not convenient.
Using Crypto Exchanges
This is one of the easiest ways on how to find a Bitcoin wallet owner.
Cryptocurrency exchanges are a safe and convenient way to buy bitcoin.
They hold the access keys for you and they are heavily regulated, like other financial institutions. They have to use KYC (Know Your Customer) to prevent money laundering, fraud or other criminal activities.
Every Bitcoin address on this exchange is directly tied to the personal information of every user. But this information can only be accessed through the exchange or the government.
Of course, a hacker could be able to get into the data and steal private keys like it happened often in the past, not only on Bitcoin exchanges, but for other services like social media, too.
With this information, it is possible to trace your address activity.
How to Trace Bitcoin Wallet Owners?
The blockchain stores all transaction information and if we have the address, we can easily check all the transactions the address is involved in.
With the Bitcoin address, we can now look into the ledger with the use of a service provider.
There are providers like blockchain explorers which use the data from the distributed ledger to do analyses. They offer this data for people for things like tracking Bitcoin addresses, looking into the history of them, or to analyze transaction volumes.
When you use such a service, you can take the address and analyze all transactions associated with it. Not only can you look at all transactions up to now, you could track the owner of a Bitcoin wallet for future transactions.
This potential the blockchain offers can help to prevent money laundering and fraud. But the normal users can be traced the same way.
To be as anonymous as possible, try to separate all the information you use associated with Bitcoin.
Are Bitcoin Addresses and Wallets Anonymous?
Bitcoin addresses and wallets are not anonymous.
As we now know, they are the complete opposite. They are even public and everyone can look into them.
This is the reason you should apply some privacy measures. Generally, you can stay anonymous because no personal information is needed to use cryptocurrencies. You can just create a wallet and use it for transactions.
But the anonymity can be lost relatively easily if you don’t care about it. If you buy bitcoin through a crypto exchange, you already lose your anonymity by creating an account on it.
They need to do KYC and you have to provide personal documents to prove your identity. In the past, there were some hacks on diverse crypto exchanges where a lot of bitcoins were stolen. So it is recommended to be cautious.
One reason people think Bitcoin is anonymous is because of the specific regulations of the countries people are living in. In some countries, it is not allowed to exchange extensive amounts of money because of high inflation.
The governments want to prevent people from escaping to other currencies. These circumstances let people believe Bitcoin is fully anonymous.
But to be completely anonymous, buy and sell bitcoin through channels where no KYC or similar things are required. Because of convenience, exchanges are the easiest and most used channel which needs personal information.
Crypto exchanges are regulated through public financial institutions because you can use traditional currencies issued by governments.
This leads to governments having the same access to your exchange account as they have to traditional bank accounts. So, in this case, Bitcoin doesn’t differ from the traditional financial system.
How to Stay Anonymous Using Bitcoin Transactions on Blockchain?
You can use some measures to increase your anonymity with Bitcoin:
- Try to avoid sharing your personal information
- Use a VPN to make tracking Bitcoin transactions harder
- Use a new address for every transaction and use multiple wallets
- Purchase BTC through anonymous channels
- Not using hosted wallets
- Use services like coin mixers
- Running full nodes
Do Not Share Your Personal Information
As mentioned before, try to separate all your personal information from the information you use for Bitcoin.
Use a separate mail and phone number so no one can link it to your personal stuff. Try different information for your passwords, security questions, user names, etc.
The more you separate it, the more likely no one will connect it to your person.
Use a VPN to Make Tracking IP Harder
VPN doesn’t give you anonymity, it is still possible to track your real IP address.
But with VPN, this tracking is harder to do and gives you therefore more security.
Someone would have to use more resources to trace transactions made by you. If you combine this step with other steps, every measure is adding up, making it even harder to track you.
At some point it won’t be worth it to track you so hackers would just search for easier ‘victims’ which do not care as much about privacy.
New Wallet Addresses for Every Transaction
This is one of the core principles everyone should use.
This is something which differs from traditional banks where you use one bank account number to send and receive payments.
But by using multiple addresses, you can make it harder to connect them all to your person. Do not forget that all transactions are public. Imagine everyone could see all the thousands of transactions from your bank account.
This principle sounds really inconvenient, but wallet providers often use this principle by creating new addresses for all your transactions automatically. Try to implement this privacy measure because people reuse old addresses.
These first tips are relatively easy to do, but you can do more than that which, however, gets inconvenient.
Purchase BTC Through Anonymous Channels
For you to stay anonymous, you should theoretically use platforms like ATMs or P2P-exchanges.
Here, you can use cash to buy bitcoin without providing personal documents.
P2P-exchanges don’t have an intermediary, like general crypto exchanges. This can be a risk because you deal directly with real people who could scam you. You should use this way with maximum caution.
These two possibilities can be a good way if you want to maximize your privacy.
Not Using Hosted Wallets
Hosted wallets are wallets which someone holds for you.
These wallets are hosted through an online service, which makes them convenient and fast to use.
Online services are popular targets for hackers. However, for small separate Bitcoin funds for things like regular purchases, they can be a good way to use Bitcoin conveniently.
Use Coin Mixers
There are providers specialized to take your bitcoins and distribute them through hundreds of transactions.
The problematic aspect is that you need to transfer your bitcoins to this provider, which could lead to another potential point of leakage.
The provider could be a scam, they could be hacked, or you could lose your bitcoin if they make a mistake. So this possibility is recommended for experienced users.
Running Full Nodes
This is more advanced and needs technical understanding.
Running a full node means to have a copy of the ledger stored on a personal device.
With a copy of the ledger, you have direct access to the blockchain, meaning you can create an address and transfer bitcoin by yourself without a third party, like exchanges or wallet providers.
Not only your transactions, but other transactions from the Bitcoin network will also go through your node. This makes it hard to separate your transactions from the other ones if someone could access your node.
If you combine some of the aforementioned tips, you can make it difficult for others to track you.
FAQ
Can You Prove You Own Your Cryptocurrency?
Owning crypto is not as easy as many think.
You don’t have a physical proof of ownership. You prove it through your private keys.
Your bitcoin is stored on the blockchain and not in your home on a device. What you own are the private keys necessary to prove that you own the bitcoins connected to it.
As long as you have your private keys, you can prove your ownership of your cryptos.
Can Someone Do Anything With Your Bitcoin Address?
Generally, no one can do anything with your Bitcoin address other than transfer funds to it.
To actually access this public address, the person should try to get your private keys. The address alone isn’t worth much without the private keys.
With the keys, a transaction can be signed and ownership can be proofed. As long as you are cautious not to give away your keys, you minimize your risk of losing your funds.
Another potential problem could be a scam where someone wants to receive payments in bitcoin from you. This is not a problem for your address, but this way people would try to steal your funds, too.
Should I Share My Bitcoin Address Publicly?
You should be careful about sharing your address publicly.
In most cases, you shouldn’t share your address publicly. By sharing it, you show everyone that this is an address tied to your person.
People could trace the transactions of this address. Even if this would be a separate address from you, people could try to follow further transactions to your actual addresses.
If you share an address publicly, you will eventually transfer the funds from it later to one of your other private addresses. This can also be traced by others, so be cautious.
Conclusion: You Can Find the Owner of a Bitcoin Wallet
Bitcoin addresses and wallets are not anonymous, and it is possible to find the owner of a Bitcoin wallet by connecting blockchain transactions to personal information from other sources.
While cryptocurrencies provide some level of privacy, it is important to take measures to increase anonymity, such as avoiding sharing personal information and using a VPN to make tracking Bitcoin transactions harder.
Additionally, using cryptocurrency exchanges requires providing personal information for KYC regulations, which can compromise anonymity.
Ultimately, staying fully anonymous with Bitcoin is difficult, but by taking precautions, users can protect their privacy to some extent.
You don’t have to go crazy with all the options you have, but to be more conscious of your data and to apply some of these options, you can make your life easier.
