In this fourth episode of Bitcoin For Non-Technical People Series, I will discuss the anonymous and pseudonymous features of Bitcoin’s currency and money transfer and payment network.
Privacy Concerns About Bitcoin
The natural question that you may have when you first hear about the bitcoin public ledger (blockchain) is, what about privacy issues?
If all the bitcoin information is public…
- What if I don’t want people to know that I just sent you a bitcoin?
- What if you don’t want somebody else to know your financial transactions?
- What if I don’t want somebody else to know that I just received a bitcoin from you right?
So there’s a privacy issue here and so what Satoshi Nakamoto did was really brilliant.
Remember, this Satoshi is a cryptographer. Satoshi had to be a cryptographer.
It’s not a debatable question otherwise Satoshi wouldn’t able to create bitcoin.
What Satoshi did was to make each account in the bitcoin public ledger “anonymous”.
Some people like to say bitcoin is anonymous.
Anonymous meas that you don’t know who it (account) is but it’s not really true.
A lot of people proclaim you can use or spend Bitcoins and nobody knows who it is.
That’s not true at all.
There are ways to do it to where you can make your bitcoin transactions “anonymous” but it’s not 100% anonymous because the bitcoin public ledger (blockchain) records all the transactions that’s ever been made in the history of the bitcoin.
So you can’t completely say that bitcoin is 100% anonymous, however, you can say that it is “pseudonymous” and if you’ll remember “pseudo” means “fake”.
What Does A Bitcoin Address
Or Account Number Look Like?
Instead of your bitcoin account displaying your full name, it will actually show an extremely long account number which consists of a bunch of random numbers and letters to represent you.
For example, if you look at any YouTube video such as the one listed below:
You will notice that after it says YouTube.com in the address bar, you will typically see a bunch of weird numbers, punctuation marks, letters of the alphabet and all that nonsense.
Those weird looking numbers and letters are used to uniquely identify the YouTube video.
Similarly, that’s how a bitcoin transaction or account is recorded in the public ledger using a string of random numbers and letters.
Here is an example of a bitcoin address:
If you would like to send me some bitcoins or a donation for my efforts to help people find freedom in their lives, you can send it to my bitcoin address above.
When you send it to my bitcoin address, no one knows that it’s me unless I tell you.
If I tell you that the bitcoin account listed above belongs to me then you will know that that long string of weird looking numbers and letters belongs to Tai Zen.
If you did not know that or if I did not tell you that the Bitcoin address or account number belongs to me, you will never know that it’s me.
Likewise, when you send me the bitcoins, if you don’t put a note in the donation message saying who it’s from, I will never know who it is that sent me the bitcoins either.
Don’t forget that when you send me some bitcoins, it will come from a long and weird looking address as well.
Bitcoin addresses are randomly created so you will never find 2 bitcoin addresses that are identical.
If the sender or receiver of a bitcoin does not identify themselves then nobody knows who they are.
So that’s why bitcoin is “pseudonymous”.
It’s not 100% anonymous.
So whenever somebody tells you that bitcoin is anonymous, I would not fall for that.
Many folks believe that bitcoin is anonymous but that is incorrect due to misinterpretations and how it is presented to the public by media outlets.
Unfortunately, it’s just how bitcoin was presented when it first came out but the reality is it’s pseudonymous which means that nobody knows what the real name of the account holder.
By the way, you may have heard or seen the long string of letters and numbers that are used to represent a bitcoin account number often referred to as a:
- bitcoin address
- bitcoin public address
- bitcoin account address
They all mean the exact same thing, don’t let the labels confuse you.
You can support and donate to our efforts on our donations page.
Click here to watch part 5.