[Question] What are some of the steps
one should take to maintain anonymity while using bitcoin — from simple to advanced?
Well Vegeta, anonymity or privacy is not a one bullet solution. There's no silver bullet
for this. You have to layer your defenses, like any aspect of information security,
and privacy is a fundamental component of information security. You have to use
layered defenses, which means you do several things and you hope that at least
some of those things work. And in conjunction they give you a degree of privacy now
and in the short and medium term future.
There are a number of things you can do. The
first one has a lot to do with how you source your bitcoin in the first place. So in terms of least
private to most private, least private is probably buying bitcoin from an exchange because
they require KYC and ID and all kinds of other things. That not only erodes your privacy,
because that bitcoin is going to be tracked and associated with that identity, but it also exposes
you to identity theft because in many cases you're dealing with small startups that cannot do
information security. And it's impossible to do that perfectly, so someone can steal those
identifiers. The second best is to buy bitcoin from some kind of bitcoin ATM.
But of course
bitcoin ATMs also sometimes require ID. Or they require a smartphone a cell phone number to
verify you. Or they're in places where there are closed circuit tv cameras all around
you, or other people who may see who you are. And you don't really want to go into a mall,
where there's a bitcoin ATM with a low low hat over your head and a hoodie over you
and kind of look around suspiciously, then you're the cartoon villain. The next one
would be to acquire bitcoin in a person-to-person transaction by exchanging cash for bitcoin in a
public setting with someone who has bitcoin. And of course you know that's going to have its own
risks and potential for exposure. Then it would be to earn bitcoin by providing your labor services,
products, or whatever, from a third party and that's a very clean way because you can do that
without an in-person interaction. And, you know, theoretically at least, only the person who's
paying you knows who you are, if that. They might not. Once you've sourced your bitcoin, of course,
how you use it really makes a huge difference. If you reuse bitcoin addresses, you violate your
So a very important rule of thumb, in any cryptocurrency really, is avoid
as much as possible address reuse. And of course you know there's only so
much you can do as a user. Because a lot of that depends on how your wallet constructs
transactions, how it constructs the change in those transactions, how it sequences outputs,
what fingerprints it leaves, et cetera, et cetera. The third one is network opsec, overall
operational security on your network connections. If you're in a public hotspot, in a cafe, using
unencrypted network connectivity to a non-ssl tls encrypted website, where you're plugging
in your name and address to have bitcoin socks delivered to your home. And then you're sending
that transaction from your one address — well I mean you're working against yourself.
finally there's all kinds of other things you can do that involve various forms of privacy
improving tools, known as mixers or coin join, coin swap, and things like that. Including trading
cryptocurrencies of one kind for another kind in decentralized markets. Now those may or may
not be legal depending on your jurisdiction. In some jurisdictions they're legal, in other
jurisdictions they're not. It may also depend on what you're doing with that crypto. Of course, if
you're doing something illegal then the process of trying to hide that is in itself illegal in almost
every jurisdiction that i can think of — and I'm not going to give you legal advice. These are
really steps. And you can think of privacy very similarly to the construct we've used in the past
to discuss financial independence and sovereignty, we say, you know. Not your keys, not your coins
is one of the steps. But you can start from buying some crypto, that's some degree of
financial independence. Then moving that away from an exchange, that's another degree of
independence. Then using a hardware wallet, that's another degree of independence.
And we talk about
that as the staircase of sovereignty — a term invented by Stephanie Murphy. I really love that
visual of climbing up the staircase to achieve greater and greater financial sovereignty.
Well the same thing applies to privacy, right? You can start at the bottom step
and the very fact that you're not using venmo or some other crap like that — that's
broadcasting your financial transactions to the entire world and every intelligence agency that's
listening — is already one step. I mean, even if you use bitcoin badly, you're already doing better
than venmo or many of the other things.
So opting out is step one. Opting out of the system of
surveillance, traditional finances step one. And then you can start climbing up the ladder.
Every step is worthwhile. There is no step at which you're not a true bitcoiner, you don't take
privacy seriously, we're going to [judge you]. No! Applause! You managed to take one step.
you, you're already doing something different from the majority of people out there who don't
care enough about their financial privacy. And if you make it three or four steps staircase,
you're really making a difference in the world! So keep it up. Hi. Thanks for watching the video. I'm
Andreas Antonopoulos. I'm the author of Mastering Bitcoin, Mastering Ethereum, and The Internet
of Money series. If you'd like to support my mission of bringing education, about bitcoin and
open blockchains, to as many people as possible under open free creative commons licenses, please
consider subscribing to my channel and supporting me on patreon.com/aantonop