For those who believe Bitcoin (BTC) transactions are very anonymous, there is a bit of bad news as Camila Russo, a fintech journalist says transactions with the leading cryptocurrency is not as concealed as most people have been led to believe.
Russo got the revelation concerning Bitcoin transactions after speaking with an FBI agent who is familiar with the cryptocurrency space. She said most users believe cryptocurrencies are anonymous they are rather “pseudonymous”, i.e not truly anonymous and so could be easily tracked once associated with an IP address.
According to the FBI agent who was also a blockchain analyst, solving money laundering or black market cases are a walk in the park for the agency and so the authorities are happy to receive such cases because of the ease of tracking BTC transactions which are used in the crimes, Russo reported.
She further mentioned that only 10% of Bitcoin users put it to the intended use as digital currency to pay for goods and services. She said:
“The evasion has really come down from where it was in the early days… So we’re seeing very little, you know, fundamental use for Bitcoin like as it was intended as a digital money.”
In fact, she said Bitcoin is used more often for money laundering these days than for “legitimate” payments.
“Its like, black market transactions and money laundering and all of that are still a bigger use case for Bitcoin than remittances and cross-border transfer something more like legitimate use cases”
Apart from its “pseudonymous” nature, the Bitcoin network has also been “accused” of being too centralized. According to a study conducted in Cornell University, Ethereum network is more decentralized than Bitcoin network because Ethereum nodes are more evenly spread around the globe while 56% of Bitcoin nodes are from data centers. This is just one of the Altcoins that is proven to be more decentralized than Bitcoin.
It will seem like Bitcoin needs to work on its underlying technology to improve the anonymity of transactions or one of the top privacy coins which offer more anonymity with better privacy and security features may soon take its place as cryptocurrency users wouldn’t be so comfortable with a key aspect of the cryptocurrency ecosystem such as privacy taken away from them.
Decentralization to improve the security of the network is also an important improvement the Bitcoin obviously needs to make as newer cryptocurrencies such as Ripple (XRP) will also take over in that regard just like Nigel Green predicted that new technologically advanced cryptocurrencies will dominate Bitcoin in the future.