How Anonymous is Bitcoin?
Bitcoin is often described as a way to transact anonymously. But just how anonymous is it? Anonymity vs. privacy First off, it is useful to draw a basic distinction between anonymity and privacy in the context of financial transactions. We will call a transaction “anonymous” if no one knows who you are. We will call a transaction “private” if what you purchased, and for what amount, are unknown. Certain financial transactions are private but not anonymous; for example, the donor wall at the local art museum, which identifies the names of donors but not the amounts donated. Bitcoin, by contrast, is anonymous but not private: identities are nowhere recorded in the bitcoin protocol itself, but every transaction performed with bitcoin is visible on the distributed electronic public ledger known as the blockchain. The anonymity provided by bitcoin is at once a point of attraction and a challenge for financial regulation. As the pace of adoption of the currency grows and as it comes u