Anonymize bitcoin values
If you receive payments with Bitcoin, many service providers can convert them to your local currency. Any transaction issued with Bitcoin cannot be reversed, they can only be refunded by the person receiving the funds. That means you should take care to do business with people and organizations you know and trust, or who have an established reputation. For their part, businesses need to keep control of the payment requests they are displaying to their customers.
Bitcoin can detect typos and usually won't let you send money to an invalid address by mistake. Additional services might exist in the future to provide more choice and protection for the consumer. Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address.
However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy. Read more about protecting your privacy. Transactions don't start out as irreversible. Instead, they get a confirmation score that indicates how hard it is to reverse them see table.
Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer.
Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. During these growing pains you might encounter increased fees, slower confirmations, or even more severe issues. Be prepared for problems and consult a technical expert before making any major investments, but keep in mind that nobody can predict Bitcoin's future. Bitcoin is not an official currency.
Any other purchases made using that address are then trivial to track down. There are a couple of additional factors that make this process trickier.
The Web tracker might leak the cost of the product but not include shipping, so the total Bitcoin purchase may not be clear. There may also be a gap between the time the user viewed the page the information leaked from—the checkout cart, for example—and the time when the purchase was actually made.
Bitcoin purchases are time-stamped, so it becomes harder to track them down if the time is not known accurately.
The purchase amount is usually given in a local currency such as dollars or pounds and then converted into Bitcoin at the instant of purchase. Because of the large variability in Bitcoin exchange rates, it can be hard to work out the exact Bitcoin value if the purchase time is not known accurately. All these factors make it harder to link individuals to their Bitcoin transactions, but it is by no means impossible. There are ways to further hide Bitcoin transactions. This mixes their bitcoins, making it harder to identify them.
But Goldfeder and co point out that if an individual uses CoinJoin to make several purchases in this way, it is straightforward to link them back: These are useful but can sometimes miss trackers and at other times prevent purchases entirely. But it will also be music to the ears of law enforcement agencies hoping to track nefarious activities.
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