Since its introduction, one of Bitcoin’s largest benefits has been the ability to conduct business anonymously. No big banks are tracking your purchases. No companies are selling information about you. At least in theory, nobody knows who is actually spending a given Bitcoin.
Unfortunately, plenty of websites still track their visitors and their activities. Our online purchases also need somewhere to go. With the exception of software, most things we buy from the internet need to be shipped somewhere. That alone can be very revealing information and it certainly puts a damper on the whole “anonymous transaction” aspect.
If you’re to truly shop anonymously, there’s a few things to do first:
- Encrypt your internet connection
- Get a P.O. Box
- Change Wallets frequently
- “Launder” your coins
- Acquire coins on P2P services
For reference, this guide is targeted at users with some or very little Bitcoin experience. Users with absolutely no experience or understanding of Bitcoin may want to check the beginner’s guide section. Advanced users are recommended to skim through the headers for relevant tips.
Using Encryption to Browse Anonymously
One of the key elements to doing anything anonymous online is using an internet connection that can’t be traced. That goes hand-in-hand with using an encrypted service to access any sites you wish to shop on. While there are a few different ways to accomplish this, the most convenient method is by far by using a Virtual Private Network (VPN).
A VPN is a service that connects you to a remote server that utilizes 256-bit AES encryption to protect your connection from outside interference, such as hackers taking advantage of unsecured public Wi-Fi connections. For the purposes of anonymity, a VPN also hides your IP address because websites instead register the VPN’s location when you connect to pages.
Alternatively, you can access shop pages using the Tor browser, which routes your connection through multiple locations before landing at your destination. While Tor does provide some degree of anonymity, it falls short when you connect to any other services while using it. Tor only protects the user’s browser, not other services.
It still might be a good option in select cases, but you’re usually better off using a VPN, particularly if you’re conducting business with a non-PC, such as a smartphone or a tablet. More information about VPNs can be found in this review written by Secure Thoughts.
Using a P.O. Box
Using a P.O. box is a simple but effective strategy to reduce the likelihood of being linked to your individual purchases. When items periodically ship to your residence, it’s easy to establish a pattern. That puts your anonymity seriously at risk.
When you ship items to a P.O. box, you can use a pseudonym to protect your identity. For most services, it isn’t necessary to present your real name for deliveries; all you need is the key to your box. It’s a strategy many famous individuals use to avoid being profiled and it will work just as effectively for you.
Use Multiple Bitcoin Wallets
Bitcoins are stored in digital “Wallets,” which can be either in the possession of the individual or hosted by a company online. Beginners often associate Wallets with their physical counterparts; they use them as a safe and consistent place to store their Bitcoins.
But Wallets were never designed to be a permanent safe location for your currency. Each one has a unique address, and using the same Wallet repeatedly allows anyone who cares to read Bitcoin blockchain records to establish a pattern. Even users with only moderate levels of experience can use that information to start figuring out who you are.
Creating new Wallet addresses is extraordinarily easy and it goes a long way in keeping you anonymous. Most Wallet services allow you to create new addresses at will, so just be sure to make a new one on a regular basis. Even doing so monthly is probably okay.
In the regular financial world, laundering has a very negative and very illegal connotation. Such rules don’t necessarily apply to Bitcoin. You can transfer bitcoins between wallet addresses or use a mixing service to do it automatically to muddy the origins of a given purchase. This is a type of laundering, but it doesn’t fall under any laws, and since bitcoin isn’t taxed, there’s no crime committed.
New users should be warned that if you plan to use a mixer service, be sure to vet its reliability before putting coins into the platform. Some mixers are just scam sites looking to steal your bitcoins. You may also end up with someone else’s coins that have a history of criminal activity. In the end, using your own addresses to mix coins may be the most secure method, if less convenient.
Buying Coins Anonymously
Shopping with bitcoins is one thing, but you need to actually have coins to go shopping first. One thing that can interfere with your anonymity is your method of purchasing. Unless you’re personally mining the coins or working for them, chances are that you’ll need to buy them.
Using a website frequently means giving up your personal information, so the best way to get Bitcoins anonymously is to buy them direct from other users on a P2P service or at an in-person convention. Conventions aren’t an option for everyone, so P2P is really your go to choice.
If you don’t mind a little in-person activity, LocalBitcoins is a cool way to acquire coins anonymously because people post ads for their coins and you can buy them directly. Bitsquare is another good choice, as you can use their P2P client to exchange for coins directly.
Whether you’re shopping anonymously because you just prefer to be private or you have some reason to avoid your purchases being traced to you, you need to plan your actions carefully. Missing any one step can leave evidence of your purchases behind that can be linked straight to you.
Bitcoins were not designed to be untraceable. While they avoid the problems associated with regular banking institutions, all Bitcoin transactions are publicly available by visiting the blockchain database.
If you way to remain unseen, take it seriously. Use a VPN, regularly change Wallets, purchase your coins directly and ensure packages are sent somewhere other than your publicly registered front door.
About the Author: Faith is an online safety blogger and internet securities specialist. Her work centers on finding solutions to everyday problems for individuals and businesses that face the constant challenges created by new technology.
Have other questions about Bitcoin? Not sure if anonymous shopping is for you? Post your questions and comments below.
Images courtesy of Pixabay, Shutterstock.