Pseudonymity versus anonymity
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
Most blockchains, Bitcoin included, are pseudonymous rather than anonymous. Your name is replaced by an address, but the amounts and counterparties stay readable by anyone. Link that address to you even once, and your entire past becomes legible.
Key points
- An address is not your name, but it is not anonymity either
- Amounts and counterparties are readable by anyone
- One link to your identity exposes the whole history
- Hiding your name is not the same as being untraceable
Definition
A state in which activity is recorded under an address rather than a legal name. The name is hidden but the transactions are public, so the moment the address is tied to a person, anonymity is gone.
Anonymity means nobody can tell who acted. Pseudonymity means the actor is recorded under a substitute name. Blockchains are the latter: the ledger holds no names or addresses of residence, yet anyone can look up which address sent how much to which other address.
The trouble starts the moment that substitute name attaches to a person. Exchanges record withdrawal addresses alongside verified identity documents. Post a donation address publicly and its balance and every payment become readable as yours. The same applies to an address handed to a counterparty in a private sale.
It is more accurate to treat pseudonymity as something you start with and gradually lose through use. Knowing where the leaks happen is therefore the first step towards not accidentally publishing your balance or your list of counterparties.
Watch out for
- · Posting your address on social media publishes your balance and payment history with it
- · Exchanges store your verified identity next to every withdrawal address you use
- · Even assets marketed as anonymous leak information depending on how they are used