In the early days of bitcoin, it was used by criminals as a haven. The main reason for this is that bitcoin is anonymous and no one can trace the transactions made in it. However, transactions made with bitcoin can be traced through sophisticated blockchain analysis software by identifying all the activities of the criminal on the blockchain. If you are interested in bitcoin trading visit Bitcoin Circuit .
Challenges facing bitcoin transaction addresses
The bitcoin blockchain is alphanumeric strings and is supposed to be a database of numbers. Nor does it have real-world identification, therefore, you may face some challenges when a transaction identification is performed.
● Mixer— A mixer is a service designed to increase confidentiality. It is used by criminals to mix funds, and it can create more problems in tracing transactions with bitcoins.
● Tracking transactions — Most wallets are such in which you can easily get the information related to the transaction. But at the same time, it is going to be accessible to everyone who has a crypto wallet. You will find many websites online using which you can check the transactions done on the blockchain.
● Self-Custody and Intermediate Wallets – For BTC, the blockchain allows you to create thousands of wallets and it will be easy enough for you to create self-custodial funds on them. In this, intermediary wallets are created through intermediaries to remove the identity of the culprit source as well as process funds.
● Transaction data – When you pay someone at the given address in currencies like bitcoin, litecoin, then the details about the transfer are added to the blockchain. When it comes to blockchain, these details are made publicly available, the existing list of which is included below:
- Sender’s address;
- Amount of cryptocurrency sent;
- Date of transfer.
- Receiver’s address;
Note that each transaction requires you to provide your ID, which is called the TXID. Anyone to whom you are going to transfer currency may ask you for a transaction ID. The only thing it will confirm is that the transaction was done. The ID provided will be the reference for the payment order at the time you process the transaction. After performing a crypto transaction, the proof is provided whether the transfer was successful or failed. The transaction ID can help you find the transaction details if you want to check if a transaction has already been processed.
Use of bitcoin transaction tracing cases
There is only one crucial matter of tracking bitcoin transactions and that is to identify criminal activity and prevent BTC money laundering. Blockchain analysis tools and sophisticated tracing are used by law enforcement authorities to stop all money laundering activities.
User privacy
Privacy, which is enshrined in the Universal Declaration of Human Rights, is also a human right. Maintaining confidentiality is the topmost and primary step for enforcement agencies and businesses. In 2019, the survey revealed that few Americans own BTC. Users are using crypto every day for their business purpose. It will be of paramount importance that you need to understand the value of privacy while deploying bitcoin tracing technologies and compliance solutions. If you are also concerned about your financial privacy, then at the time when you use crypto you should use an appropriate tool.
Closing thought
To protect the privacy of all the users who are involved with this business activity and want to enable it but it is not a zero-zone game. The adoption of crypto is important for law authorities to be able to identify all criminal activity on the blockchain. We will look at comprehensive legislation to restrict crypto-related business activities. They will become more aware of all those user privacy problems in the crypto space and invent privacy-focused solutions.
