Some people argue that Bitcoin is the preferred payment method. Here’s why criminals can’t hide Bitcoin from law enforcers.
A primary concern for many governments is the possibility of criminals using Bitcoin to commit crimes. The ability to transact anonymously means Bitcoin can be the preferred payment method for cybercriminals. But can criminals hide Bitcoin?
The most straightforward answer is no. Paying with Bitcoin doesn’t hide the transaction from the rest of the world. Bitcoin uses a blockchain as its underlying technology. This technology creates a public ledger with details of every Bitcoin transaction, including the crypto wallet address and the IP address of the owner.
Thus, law enforcers can use such information to link Bitcoin transactions to their owners. And with law enforcers requiring crypto exchanges to put new customers through the identity verification process and some hiring cryptocurrency experts, the efforts needed to link a digital address or wallet to an individual’s or IP address is reducing.
The numerous benefits of cryptocurrencies like Bitcoin have prompted some countries to start creating their digital currencies. For instance, China has developed a government-issued digital Yuan. People can trade this virtual currency online within the law. Perhaps, you can visit this link for more details about this digital currency. Nevertheless, such developments show that governments slowly realize the potential of virtual currencies.
Why Hiding Bitcoin is Almost Impossible
Bitcoin being a digital currency requires people to transact with it online. And everybody in the Bitcoin network can see every transaction that individuals complete with this cryptocurrency. The blockchain, a public ledger, records every Bitcoin transaction. Consequently, government authorities can track every transaction on the Bitcoin network.
And all participants in the Bitcoin network have a complete copy of the blockchain since it’s a decentralized ledger. Some of the transaction details that law enforcers can access on this public ledger include the time, amount, and wallet from which a person sends money and the recipient. Thus, anybody in the Bitcoin network, including law enforcers, can analyze different crypto wallets’ transactions.
Some experts even note that Bitcoin transactions are more accessible to trace than cash transfers. Thus, using Bitcoin to engage in criminal activities is stupid these days.
The Myth about Bitcoin’s Anonymity
Some people think criminals can hide Bitcoin due to its anonymity aspect. Bitcoin has a public record accessible to any participant in the network. However, this cryptocurrency lacks an inbuilt system for identifying the real-world owner of the wallet or tokens in it. Having a Bitcoin wallet doesn’t require identity proof. And this creates Bitcoin’s anonymity myth.
However, cryptocurrency exchanges solve this problem by asking new members to prove their identities before transacting with Bitcoin. Thus, these platforms can share this information with law enforcers if or when necessary.
In simple terms, a Bitcoin wallet makes you anonymous only when it’s idle and empty. However, this anonymity ends the moment you send or receive Bitcoin. That’s because law enforcers can use the Know Your Customer data you upload to the crypto exchange to trace you.
Law enforcement agencies can also trace you with information crumbs and money trails, though that isn’t easy. Some authorities capture data from the darknet markets. Others mine Bitcoin to sniff data themselves. Even criminals’ history on the internet can help law enforcers cross-reference KYC information from digital crypto exchanges. Such measures can help law enforcers trace and arrest people who engage in Bitcoin’s criminal activities.
Final Thoughts
Bitcoin provides some level of anonymity. However, hiding Bitcoins is not easy, provided a person uses their digital wallet to transfer or receive funds. Bitcoins’ flow is open to the public, including law enforcers, and more traceable. Thus, criminals can’t hide Bitcoin because law enforcers can trace and recover the funds.
