How to Bet Bitcoin Privately

Is Bitcoin actually anonymous?

Bitcoin beginners assume that all cryptocurrencies are anonymous. That’s far from the truth. Blame that idea on movies and popular culture. Especially over the last few years, computer scientists and financial fraud experts have proven that Bitcoin transactions can indeed be traced. It’s not easy to do and it requires a lot of mental gymnastics, but it’s also not necessarily proper to label Bitcoin as totally anonymous. The better label rather is to call Bitcoin pseudo-anonymous. It sort of is and sort of isn’t.

This guide will touch on how Bitcoin privacy relates to gambling and whether or not participating in private Bitcoin transactions is both safe and legal.

It’s time to pull back the curtains on Bitcoin privacy and reveal everything it takes to truly maintain anonymity in the world of digital money.

Does Bitcoin require identity documents?

While terms like transaction fees and wallets are synonymous with the world of fiat currency, there are many terms that exist within the Bitcoin vernacular that don’t exactly roll off the tongue or provide the average person with a clear understanding of how everything works. It’s important to understand the basics of Bitcoin transactions before diving into privacy related matters.

The first key principle to understand with regards to Bitcoin transactions is the idea that Bitcoin allows every user, gamblers included, to act as their own bank. There is no customer service hotline to complain to if something goes wrong. That’s the downside. However, the upside of being your own bank however is arguably much greater.

In a traditional fiat banking system, a customer has to turn over identification. Bankers can scan a debit or credit card and see everything a customer is doing with their money. They can share that information with governments. That makes the traditional banking system very invasive. There is little to no room for privacy apart from the privacy policies that bankers must follow in terms of not communicating your information to third parties like a spouse, family member or stranger that may not have joint privileges on your accounts.

Then add to that the complexities of modern day economics. Things like fractional reserve banking, supply and demand and inflation are concepts that most people don’t understand at a macro level, even if they know the definitions of the terms themselves. That’s because unlike digital currencies, most of which register transactions on completely public ledgers for everyone to see, the traditional financial system does not make the details of that ledger public. Only people in positions of influence and power have access to that. The average person is not one of those privileged individuals.

Anonymous Bitcoin Casinos

You’re not alone in wanting to remain anonymous when gambling cryptocurrencies. The following casinos have no ID requirements. You can find a full list of anonymous casinos here.

Understanding the Elements of a Bitcoin Transaction

Deep dive discussions about economics aside, all of the key properties of a Bitcoin transaction are designed to maintain both privacy, autonomy and equal access to monetary value among all users.

The table of basic terminology below outlines the language of Bitcoin. The terms of specific to decentralized technology and peer-to-peer exchanges of value that wasn’t created by a central government and doesn’t need an all-powerful central authority to oversee its use.

As noted above, a private key is what identifies one’s own individual Bitcoin wallet. There’s a saying in Bitcoin. If you don’t own your private keys, you don’t really own your Bitcoin. That is to say, anybody leaving Bitcoin on an online wallet or exchange connected to the internet is entrusting a third party with their currency. Put differently, if you don’t control your private keys, you’re leaving yourself susceptible to third party hacks or theft. That means using an offline wallet or hardware storage solution like a Trezor or Nano Ledger S to safeguard your Bitcoin.

In order for a Bitcoin transaction to be completed, bits of information called inputs need to add up to the sum of the transaction before it can be validated. This prevents bitcoins from being counterfeited and it also helps to maintain privacy while still validating that the value being exchanged is real and genuine.

Public keys are what allow users to send and receive cryptocurrency among one another, whilst maintaining the exclusivity and privacy inherent in protecting your own private key related data.

Such is the beauty of Bitcoin and the blockchain.

Why Are Some Bitcoin Transactions Not Private?

With everything that’s involved with creating and registering a Bitcoin transaction on a public ledger, it’s natural for most beginners to assume that all transactions are private. That’s not true. In recent years many data analytics and fraud prevention companies have begun to specialize in detecting the origins of Bitcoin transactions and assigning them back to the original transaction participants. Ultimately, what it means is that the blockchain is a really good tool for maintaining accurate records and preventing fraud, but it’s not so good for protecting privacy.

How to Trace a Bitcoin Transaction Back to its Origins

The United States’ Mueller Report uncovered information related to Russian interference in the 2016 United States presidential election. This report was able to uncover a specific Bitcoin transaction for a specific amount on a specific date. Investigators were able to take this information and find the exact Bitcoin transaction associated with the Russian group responsible for interfering in the election. That’s all the information anyone needs to trace a transaction back to the original users involved. The YouTube video below tells the story in more detail:

How Can I Stay Anonymous Using Bitcoin?

While privacy is not granted by default, there are a number of ways that a user can maximize their anonymity with varying degrees of effort.

One Address Per Transaction

With Bitcoin, creating a new public address is free and instant. Given that each address contains a public history of all its transactions on the blockchain, the more transactions sent to any single address the more of a profile that can be built. The simplest best practice for remaining anonymous in Bitcoin is to create a new address for every receiving transaction. That means that each address will only ever have one publicly visible transaction in its entire history. Most reputable wallet providers will allow users to simply click a button and immediately generate a new public address.

Using Bitcoin Mixing Services

Another option for increasing anonymity is to use a Bitcoin mixing service. As mentioned earlier, a Bitcoin transaction requires several inputs to equal a given output in order for a transaction to be valid. A mixer essentially mixes together the data representing inputs and outputs so that it’s more difficult (if not impossible) to tell where a transaction came from. The video below explains in further detail:

Decentralized Exchanges and Meeting in Person

One final way to maintain more anonymity in your Bitcoin dealings is to use crypto exchanges that not only don’t collect your personal information through KYC procedures, but also don’t use centralized servers to store crypto. These are called decentralized exchanges, because there is no central server or honeypot for hackers or investigators to monitor. Decentralized exchanges rely on smart contracts, many of them operate on the Ethereum network or blockchains not associated with Bitcoin, but they still allow you to make trades relating to Bitcoin and any number of altcoins.

Meeting up in person is also a great alternative. Sites like LocalBitcoins.com and LocalCryptos.com act as marketplaces that enable users to arrange meeting in person exchanging cash or whatever goods or services they wish in exchange for Bitcoin.

These services were very popular years ago however governments are cracking down on KYC requirements for these businesses, which now makes maintaining anonymity more difficult.

Summary: Bitcoin Privacy and How to Do It Right

Here’s a quick recap of how to do Bitcoin privacy right:

• Never share your private keys with anyone unless you want to give them access to your Bitcoin.
• Bitcoin transactions can be traced back to their original origins using deductive reasoning and basic information, such as the amount being transferred and the date the transaction occurred.
• Bitcoin mixers make it harder to trace the origins of a transaction by mixing together data related to inputs and outputs.
• Decentralized exchanges use smart contracts rather than centralized servers to complete transactions. This increases anonymity.
• Meeting up in person to exchange cash, goods or services for Bitcoin and generating a new address every time you are exchanging coins with someone else are the two simplest and most practical ways to increase anonymity.

What Else Can I Do To Stay Anonymous with Bitcoin?

The Lightning Network is an additional layer of code built on top of of the Bitcoin network that allows users to create individual (and private) payment channels that operate away from the public blockchain.

Crypto users and gamblers who want to keep their gaming private need to use privacy centric cryptocurrencies like Monero or ZCash to hide the origins of their transactions.

Monero uses a tool called ring signatures and stealth addresses to hide the identity of a transaction. ZCash uses a concept known as zero-knowledge proofs to confirm transactions. The idea is that all parties involved can share their information, and prove the validity of that information without total knowledge of the information being provided by the other users in the transaction.

Is It Safe and Legal to Use Private Bitcoin Transactions?

Yes! Private Bitcoin transactions are totally legal and as long as you are not depending on a third-party to provide privacy to you or hold onto your private keys, it’s perfectly safe too!

Bitcoin’s decentralized infrastructure and its algorithmic approach to rewarding network participants with coins are all a part of the broader goal of maintaining both security and privacy when transactions are initiated and completed. Bitcoin’s very nature lends itself to highly secure and fraud-proof interactions between users with no need for a central authority to oversee everything.

How Can I start Using Bitcoin Anonymously?

Again, the key here is to protect private keys, keep a wallet off-line, use new addresses for each transaction and either use a mixer to hide the inputs and outputs related to a transaction or use Bitcoin’s lightning network to set up private payment channels between users.

The last suggestion requires technical know-how. The average Bitcoin user will be best off using a mixer or a privacy centric cryptocurrency to provide the most privacy protection possible.

Bitcoin Privacy Features: Pros and Cons

The 5,000-foot view of privacy features related to the Bitcoin network provided in this guide some up a variety of pros and cons related to trying to maintain anonymity on the network. Here they are provided in a digestible list format.

Closing Thoughts

There you have it! The ultimate guide to Bitcoin and privacy. As you continue along your journey to being your own bank and protecting your privacy and your bankroll, remember that the best way to maintain anonymity is to use as many of Bitcoin’s privacy features as you can whenever you transact. That said, as much as decentralized technology, public ledgers and algorithms can increase your anonymity, the ability to remain private ultimately comes down to the level of commitment a human being has to hiding their identity and keeping information to themselves regardless of the features programmers create and the underlying benefits those features provide.