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Is Bitcoin traceable?

31 May 15:36

Since its inception, Bitcoin has experienced massive growth in value and popularity among crypto enthusiasts. Today, Bitcoin is the no.1 crypto coin in the world by market capitalization and popularity.

When Bitcoin first came to use back in 2009, law enforcement officers' panicked' because there was the notion that the technology made it hard to trace criminals such as drug traffickers and money launderers. But as it would emerge in subsequent years, it's possible to trace Bitcoin transactions. Like that of other cryptocurrencies, the traceability feature of Bitcoin can be used to track criminals who may want to use the crypto coin to conduct criminal activities. In essence, you'll learn how Bitcoin is traceable, as explained in this article.

Bitcoin Features

Bitcoin is known to have the most advanced technology that aims to improve users' security and transactions. It's described as anonymous and probably the most transparent. Bitcoin is tipped to offer the best privacy when used appropriately.

Stored in a public ledger (Blockchain)

All transactions in Bitcoin are securely stored in the public ledger (Blockchain). The Blockchain is regularly updated, and it keeps both wallet and exchange transactions. The process guarantees users pseudo-anonymity. It means that although Bitcoin transactions come with some measures of privacy, they are traceable. However, traceability has some limits. For example, it's challenging to trace some of the BTC origins if a user mixes up or creates everyday transactions. But this limitation has also been thwarted with the latest machine learning technology, as will be explained later in the article.

Bitcoin Address

A Bitcoin address, just like those of other cryptocurrencies, is just a long string of numbers and codes unique to each wallet. This has caused worries because it takes an unauthorized person to access the information to trace all your transactions, raising the privacy question. However, one advantage of Bitcoin is that the Blockchain does not record everything about you as a transacting party, including your identities. Bitcoin can, therefore, be described as pseudonymous but not anonymous because only addresses are recorded while identities are not.

Traceability methods

Input and input amount determine how traceable a transaction is. Anyone who wants to trace BTC transactions can group the addresses into clusters to enable participants to know the owners of specific addresses. By design, these addresses can't remain entirely anonymous. Moreover, Blockchain's records are permanent, so it's easy to look out for the information in the future if need be, as long as one has access to a Bitcoin address.

Machine learning and traceability of Bitcoin

Machine learning has made nearly all cryptocurrencies, including Bitcoin, traceable. Through machine learning, it's easy to pinpoint transactions much more easily with the help of big data technology and artificial intelligence (AI). Big data and AI have made it a lot easier to keep track of all transactions on Blockchain and analyze patterns, which may give the notion that a user's privacy can be compromised. Despite the machine learning technological breakthrough, you can still protect your privacy by hiding your IP address, not revealing your address in public, limiting mixing address, and make use of your Bitcoin address only once. With these measures, your privacy will be ensured, although your Bitcoin transactions are still traceable.

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