Articles written by both Bitcoin supporters and detractors frequently stress the fact that “Bitcoin is NOT anonymous”. Critics would like you to believe that if you use Bitcoin, your financial privacy will be totally compromised. Supporters often make a similar case to try to keep the regulators at bay. The reality, however, is that Bitcoin does provide a fairly high degree of privacy already and upcoming improvements should significantly increase the degree of anonymity. In this article I’ll provide an overview of where we are at present and talk about some up coming privacy enhancements.
As you likely know, all Bitcoin transactions are stored in a public ledger which anyone can view. It’s done like this because there simply isn’t any other way to prevent double spends without providing everyone with a copy of the transaction history. What this means is that someone can (potentially) parse this ledger and view all of your transactions. Of course, this tends to be relatively difficult since your identity isn’t recorded in the ledger, only your Bitcoin address. Someone looking through the ledger will only see that bitcoins were sent from one address to another:
17mJFJJcpsbEVM41QMy9gvooKJF4qJRyun ==10btc==> 1Ct9GnnCkTce65osEkXhNcq3ZArvzAjR1v