In the early days, Bitcoin was often inaccurately considered to be an anonymous digital currency. We now know that’s not true. Bitcoin is pseudonymous in nature, not anonymous, highly transparent, and can be easily tracked through blockchain forensics tracking. Whether or not the pseudonymity is good or bad depends on who you ask. While blockchain forensics tracking can be used to track cryptocurrency, individuals can easily employ a number of
practices to improve their anonymity.
There are many legitimate reasons to seek anonymity. Greater anonymity tends to lead to better security. And just as many people wouldn’t want their bank account balance disclosed, it’s reasonable for an individual to want to avoid disclosing their cryptocurrency holdings to everyone they do business with. But there are illegitimate reasons as well. If an individual is attempting to hide cryptocurrency assets in the event of divorce or bankruptcy, or they
have committed or are committing fraud, embezzlement, money laundering, or extortion, they would logically seek to anonymize themselves, which begs the question: just how easy is it to accomplish?