Using Bitcoin for Financial Privacy

Keeping finances private is important for security, and this is why we are careful to properly store and dispose of our bills and bank statements. But managing this information online is not as easy. This is one reason why hackers and thieves have moved out of our trash and over to online snooping. Online records are very easily copied and transferred, and they leave a digital trail. Even after we have deleted this electronic information, it can still be alive and well somewhere on the Internet.

Using Bitcoin instead of the conventional banking system is a good idea because it works on a different level. The system is built to be secure, unlike banks which have struggled to keep up with security since they have moved online. In addition, you as the owner of the account are the sole manager of your finances, and you do not need to submit a ton of personal information before getting approved. Setting up your Bitcoin account is also quick and easy, as our top VPN ExpressVPN has shared.

Your Identity is Secure

Privacy for your identity and transactions is a top priority with Bitcoin. Instead of having to verify your identity as you do with banks and other online payment systems, Bitcoin allows the use of an alias. This makes it easy for even high profile individuals to evade the snoops. For instance, journalists in restrictive countries can use Bitcoin to pay for the VPNs that they need to get the news about government oppression out in the open. Activists in conservative communities can use Bitcoin to fund campaigns against government-supported policies. These campaigns can also use Bitcoin to run their websites and create the materials they need to inform the public. Without financial privacy, the activities of these brave souls could easily be used to trace their whereabouts and silence them.

The average Internet user can use Bitcoin as well. The Internet is a dangerous place to be these days with so many spies and hackers and thieves out there waiting to pounce. Privacy for your identity is simply the first step to security. Bitcoin privacy is also a great help to individuals who are stuck in abusive situations. Money is one thing that their abusers withhold to maintain power over them, and a Bitcoin account can be secretly set up and remain hidden for the day of the great escape.

Your individual or group Bitcoin account can remain as anonymous as you wish. It can also be configured to allow shared access and to reveal some pieces of information as you desire. This is very useful for rights groups who are accountable to their donors but who want to make sure that their volunteers remain protected. When going up against governments and big corporations, there is always the danger of harassment. These workers need to be safe from the threat of fines or jail time for trying to help their neighbors.

The Transparent System

Bitcoin is a transparent system, allowing users to build legitimate profiles, but this does not mean that privacy is at stake. Maintaining privacy is really about maintaining control over your information. Bitcoin allows users to show or hide whatever personal information they choose. Sometimes, you will need to provide proofs to establish your legitimacy. This can be done for transactions and Bitcoin addresses. Individuals and organizations alike can perform audits via the transparent and sound Blockchain without revealing their identities.

While changing up addresses can aid privacy, using the same address can establish legitimacy when used carefully. A campaign, for instance, can maintain one address for donations to put their supporters’ minds at ease about who they are really donating to.

Using wallet software also aids the legitimizing process by providing features like digital statement signing using a private key. Your real identity is safe, but you can provide proof of your Bitcoin address or account balance with this key. Digital receipts cannot be forged, so having these is solid proof. When users are making payments, having these statements that validate addresses back and forth can ensure them of a safe transaction.

Protect Your Anonymity

Since the users are in control of their private information on Bitcoin, they need to be very careful about what they reveal about themselves. The first step is to make sure that your privacy tools are all set up. When you use a VPN, keep track of what IP addresses you connect to when making transactions. VPNs will provide privacy, but additional precautions make sure that you are not revealing yourself through behavior patterns. You can use the same IP address for transactions that you wish to reveal, but always use different ones for transactions that you would like to keep separate.

These precautions also apply to your browser. You may be on a VPN and have all your files encrypted, but if your browser has a history on you then you can be tracked. Make sure that you are using a private browser or that you have at least cleared your entire cache and set your browser to private mode. When you open your clean browser, do not open websites that you do not need and certainly do not log in to any accounts that can reveal your true identity through past visits with your real IP address or with any real information that has been entered on the sites. Check your apps as well, especially those you use for communication, and don’t leave a story trail of what you are planning to buy.

Keeping your Bitcoin wallets in order is also important. You can create as many as you need, so you can maintain a different one – like a different bank account – for each activity or online identity. Keep track of the transactions that you make with each wallet so that they do not cross over and create another traceable pattern. Unless you need it for legitimacy, make sure that your wallet does not reuse addresses. Check this most especially for withdrawals since some wallets make users use only one withdrawal address.

If you need to transfer Bitcoin between these wallets, make sure you do an exchange and not a direct transfer. This muddles up the path enough so that the transfer cannot be tracked. But make sure that you use a trusted service because you have no recourse if that user decides not to pay you. If there is another Bitcoin user that you can personally trust, you can do the exchange that way. You can also safely sell your Bitcoin and buy another cryptocurrency or cash or gold, then buy back Bitcoin with the wallet that needs the funds.

These are just a few tips to maintain privacy while using Bitcoin. If you want to learn more, stay tuned for our follow-up article on Ensuring Bitcoin Privacy.

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