Methods of obtaining and hiding cryptocurrency & transactions.

This is just a short blog post on the many methods of making truly anonymous transactions using cryptocurrency and how to hide your wallet from threat actors.

Bitcoin and de-anonymization

Bitcoin by design is pseudo-anonymous, all transactions made are publicly available via the blockchain, however, there are ways of obtaining Bitcoin that don’t de-anonymize the buyer in question. The most popular way to obtain Bitcoin is to register with an account with any online exchange, complete the KYC (Know Your Customer) form and have the Bitcoin deposited to a wallet of your choosing. This is problematic for anonymity because the coins you just brought will be tied to your identity. Software like ChainAnalysis is used by law enforcement to analyze Bitcoin transactions made on the Blockchain and pin point which exchange those coins have came from therefore de-anonymizing yourself.

Obtaining and spending Bitcoin anonymously

There are multiple ways of obtaining Bitcoin without compromising your privacy.

  • Cash in hand or cash by mail services.
    • Self explanatory, no KYC required although face to face meet ups would compromise anonymity.
  • Bitcoin mixers.
    • Bitcoin tumbling, also referred to as Bitcoin mixing or Bitcoin laundering, is the process of using a third party service to break the connection between a Bitcoin sending address and the receiving address(es). So, if you buy some Bitcoin via Coinbase you could then send your coins to a mixer to have clean, anonymous coins.
  • Stealth addresses.
    • Stealth addresses are used in transactions done via cryptocurrencies on a blockchain network to obscure public access to the parties involved in the transactions. Stealth addresses operate by having the sender use a one-time address for every transaction, even if multiple transactions are done with the same recipient. As a result, stealth addresses are helpful with ensuring the privacy of the receivers of cryptocurrency payments and their financial details. Below are wallet that can generate stealth addresses, DarkWallet is no longer in development.
      • DarkWallet https://github.com/darkwallet/darkwallet
      • libbitcoin-explorer https://github.com/libbitcoin/libbitcoin-explorer

Alternatives to Bitcoin

There are privacy focused cryptocurrencies that prevent blockchain analysis and keeps your balance and transactions completely private, they are listed below.

  • Monero (XMR)
  • Zcash (ZEC)

Hiding Monero mnemonics seeds in plain sight

Using the website https://xmr.llcoins.net/ you can generate your own Monero mnemonic seeds and encrypt them with a secure password of your choice, this good for security because if an advisory managed to get hold of your unencrypted mnemonic seeds it would be game over, however due to the design of Moreno you can encrypt your mnemonic seeds and if an advisory wanted to forensically analyse the wallet all they will get is a empty wallet with 0 transactions and 0 balance (Unless they guess your password) ๐Ÿ˜ฎ thus giving you plausible deniability.

Generating a Monero mnemonic seed.

Encrypted the seed with a password.

Decrypting the encrypted seed to show the actual private keys with monies on them.

Best security practices

Just a couple of good security practices when you’re handling cryptocurrency.

  • Use privacy coins for transactions.
  • Create multiple copies of cryptocurrency seeds and encrypt them if possible.
  • Store backups in multiple locations not just under your bed. ๐Ÿ˜‚
  • Setup multi-signatures wallet to prevent a single point of failure.

Opinion

In my opinion I have always seen bitcoin as the “HTTP” of cryptocurrencies, it has many flaws but is still the core fundamental of all cryptocurrency, however I believe that Monero is the “TOR” equivalent to bitcoin and is truly what Bitcoin was aspiring to be. With heavier regulation and privacy invasive methods to prevent money laundering I believe in a couple of years Bitcoin whales will be shifting there assets into Monero. ๐Ÿ‘€

Thanks for reading. ๐Ÿ˜

References

  • https://bestbitcoinmixers.com/
  • https://www.investopedia.com/terms/s/stealth-address-cryptocurrency.asp
  • https://github.com/libbitcoin/libbitcoin-explorer/wiki/
  • https://masterthecrypto.com/privacy-coins-anonymous-cryptocurrencies/
  • https://archive.is/MZaEj (https://wiki.unsystem.net/en/index.php/DarkWallet/Stealth)

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