Since the way that Bitcoin functions is via the blockchain - a giant, virtually tamper-proof, shared ledger of all bitcoin transactions ever made - payments can be traced, if users do not have the sophistication to take further steps to cloak themselves using digital anonymity tools.
"In the initial days of bitcoin, people...didn’t realise they were recording for posterity on the blockchain every financial transaction that ever took place," said Emin Gun Sirer, a computer science professor at Cornell University. Bitcoin addresses are anonymous, but users can be traced through IP addresses or by analysing money flows.More sophisticated criminals use obfuscation methods that make it very hard to be tracked down. One of the most basic ones is a technique known as "chain-hopping", whereby money is moved from one cryptocurrency into another, across digital currency exchanges - the less-regulated the better - to create a money trail that is almost impossible to track.
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