So you thought Bitcoin was private? Well, you're in for a lot of surprises. The truth is, it "intended" to be private but didn't succeed. Don't get me wrong, Bitcoin has achieved incredible goals and opened up the door to what is now called "the coolest thing since the invention of the internet". However, Bitcoin is not private and you should probably understand what this means: the limitations of the technology, the possible solutions and how can Bitcoin so-called privacy be removed.
Bitcoin uses a public ledger, what it means is that all the bitcoin accounts are publicly visible. In simple word: all the transactions of all the accounts a public, so if I find out an account belongs to a given person, I can trace all the transactions linked to this account. Now the trick is to find a way to identify an account to a person, given that: a) this public ledger is here forever, b) spying agencies are constantly recording and analysing our data, c) this data analysis is only getting easier as our computing power increase exponentially. So yeah, acting as if bitcoin is private/anonymous means that you're betting on the fact that spying agencies with some of the most greatest processing power in the world will never want to find out anything about you. Which, maybe is the case, maybe not, all in all it's a bet, do you want to take it? that's your choice to make.
Some of proofs of bitcoin not being anonymous:
- “Regulators Start To See Bitcoin As “Prosecution Futures”" themerkle.com/regulators-start-to-see-bitcoin-as-prosecution-futures
- “Sandia National Laboratories Reveal More Details on Bitcoin De-anonymization Tool” livebitcoinnews.com/sandia-national-laboratories-reveal-more-details-on-bitcoin-de-anonymization-tool
- JoinMarket, an open source project aiming to improve the privacy and scalability of Bitcoin transactions
- New crypto currencies such as Monero and Zcash are trying to pick up the "anonymity aim" that bitcoin originally had and make it truly happen. So far, only Monero seems to deliver though.