Although cryptocurrency has largely changed from what Satoshi first envisioned when he created Bitcoin, anonymity is still key to what makes cryptocurrency such an attractive form of exchange. However, with increasing regulation and attention on crypto, many people find that Bitcoin wallets might not be as anonymous as they once thought.
You can find out who owns a Bitcoin wallet by researching and finding information related to the wallet address and transactions. It’s a roundabout method of finding the wallet owner, but with time, effort, and some carelessness on the part of the wallet holder, it can be done.
Unfortunately, Bitcoin wallets are not as anonymous as people hoped they’d be. Thankfully, by the end of this guide, you’ll have learned a few things about keeping your wallet anonymous. Keep reading if you’d like to stay safe on the blockchain.
How To Find Out Who Owns a Bitcoin Wallet
Finding out the owner of a wallet is not impossible. However, depending on your luck and the carelessness of the wallet owner, it can be particularly difficult. The most important thing to understand is that there is almost no way to assign a name to a regular crypto wallet, but you can find the owner with some outside information.
Here’s how to find out who owns a Bitcoin wallet:
- Blockchain Explorer
- Social Media
- Centralized Exchanges
- IP Address
The fastest way to track a wallet address is using an explorer. The Blockchain Explorer is an online ledger of every transaction ever made on the Bitcoin Blockchain.
All past, present, and future transactions are logged here, so it’s very easy to see your entire transaction history if anyone obtains your address. This feature is a major spanner in the crypto anonymity machine and is key to how many wallets are tracked and hacked.
It might seem counterintuitive given that one of the biggest allures of crypto is its anonymity. However, it’s important to remember that unless a name can be assigned to an address, the address owner will remain anonymous.
Social media is one of the main problems with staying anonymous in crypto.
The biggest culprits to this are Telegram, Discord, and Twitter. Most projects on the blockchain have social media accounts since it’s one of the best ways to raise awareness and bring new members into the community.
The problem with this is that many challenges, giveaways, and other community activities require people to post their wallet addresses online. Once this happens, it’s an easy way to link you to your address.
Centralized exchanges are a direct antithesis of the original goal of cryptocurrency, which was decentralization and anonymity. However, since there are so many crypto projects, NFTs, and bits of information flying around the crypto space, centralized exchanges serve a key role in making much of it accessible.
Unfortunately, most popular centralized exchanges require KYC (Know Your Customer) before you can use most of their services. KYC is a method of identification used by companies to log user information for safety and government requirements.
Binance, the most popular exchange globally, is a key example of this.
You could use most of the platform’s services without advanced KYC requirements, but that changed late in 2021 as rising regulations and fraud caused them to upgrade security.
Most regular individuals cannot access your KYC information from centralized exchanges. However, government, courts, and other official institutions can request it. For example, if a Bitcoin wallet address catches the government’s attention, they can identify it using KYC information from a centralized exchange.
Matching an IP address to a Bitcoin wallet address is more difficult than most other methods, but it is far from impossible. When making transactions on the blockchain, you broadcast your transactions until it reaches nearby nodes.
It’s impossible to immediately know if the information from one IP address is direct or relayed from a different address. However, if someone accumulated information from different nodes, a particular IP address broadcasting information about a single Bitcoin wallet address is a relatively clear indication that they own it.
Once the wallet address can be tied to your IP, identifying the IP address will tie you to it. This method is pretty roundabout and a lot harder to do than others, but with the time and resources, it is possible.
How To Make Your Bitcoin Wallet Harder To Track
While there are many ways to track Bitcoin transactions on the blockchain, you can also take quite a few steps to ensure that your transactions remain completely anonymous. Most of them require taking a bit more care with your online identity, but some methods will directly obscure your blockchain footprint.
Here are a few ways to make your bitcoin wallet harder to track:
- Never post your Bitcoin wallet address online.
- Use a VPN to mask your IP.
- Create burner wallets.
- Use Defi to avoid KYC.
When trading crypto, it’s important to understand that you’re not always as anonymous as you think you are, so you will need to act accordingly. Start treating your Bitcoin wallet address with the same amount of care you treat your real-world bank account, and I can guarantee you’ll see positive changes.
Reasons To Trace a Crypto Wallet
Two of the most common reasons that a crypto wallet is traced involve taxes and fraud cases. Let’s take a look at why this is the case.
Crypto tax isn’t as popular as the tax on other investments, but over the past couple of years, it has slowly started to be enforced by the government. As an investment-based tax, it is classed under capital-gains similar to stocks and real estate.
Since crypto is relatively new to the mainstream, many people are unaware that it is taxable. This newness, combined with the “anonymity” people think they have, makes collecting tax on crypto difficult.
However, the IRS has slowly started to track cryptocurrency activity and tax it accordingly.
Many new industries are particularly susceptible to fraud, and cryptocurrency is no different. The stock market has existed for hundreds of years, but fraud still happens often enough that it’s a significant problem.
The crypto industry has billions of dollars in investment but barely any regulation, which means that fraud is an even bigger problem for it than it is in the stock market.
Fraudsters often track Bitcoin and other crypto wallets, taking whatever amounts they find. Many scams originate from carelessness with our wallets and their address, so keeping your address close to your chest is very important.
Tracking a wallet address also helps law enforcement on the blockchain when money is stolen. Any money stolen on the blockchain must be moved to a secure wallet with a unique address. Thanks to trackers like blockchain explorer, it’s relatively easy to track stolen funds on the blockchain.
Along with this, it’s almost impossible to move your fund off the blockchain without using a centralized exchange. Since centralized exchanges mostly have KYC requirements, it becomes easier to identify the fraudster.
Bitcoin wallets are only anonymous if no one can link you to them. Although there is no name attached to a Bitcoin wallet, there are multiple ways that people can find out who owns it.
To keep your wallet as anonymous as possible, always remember to keep your wallet address off the internet. Also, don’t link your main wallet to any external websites. Always use a burner wallet, especially if you’re not sure how legitimate the website is.