When reading about bitcoin in the media, one thing that is often emphasized about bitcoin is how it is anonymous and an ideal way of laundering money. We wonder, is bitcoin really that anonymous though? And can anything be done to make it less anonymous or at least safer?
Not that easy
Bitcoin is seen as an anonymous currency because anyone can make a wallet and create a bitcoin address without providing any kind of identification verification. Getting bitcoins to a wallet or trading bitcoins anonymously is a bit harder however. These days, most exchanges require identification for buying or selling of bitcoins and thus using a bitcoin wallet completely anonymously would require you to use either an exchange that does not require identification or mine bitcoins yourself.
And people that do have bitcoins in their wallets, should realize that bitcoin transactions always leave a trace. The entire history of bitcoin and all of its transactions can be found in the blockchain, which is publicly available. With the blockchain every transaction made with bitcoin can eternally be traced. If authorities would suspect someone from laundering money with bitcoin, all they have to do is trace the wallet address and they can see exactly where the money came from and where it went. One thing we know for sure; the non-existence of an online identity is for some branches a perfect condition.
So is bitcoin really the ideal coin for laundering money as the media often claims? It’s hard to say, although it would be possible to use the bitcoin network to launder money, it’s not quite as easy as often claimed. In virtually all cases it’s possible to trace the bitcoins, either at the point where they were bought or at the point where they were sold. While we never hear much criticism about the euro or the US dollar being used for money laundering, is it something that frequently comes up with bitcoin and in all honesty it doesn’t seem all that fair.