Can there be anonymous bitcoin transactions?

Chainalysis is well known in the crypto scene. The blockchain analysis company ensures that, for example, law enforcement agencies, but also banks and stock exchanges, get a deep insight into the transaction patterns of blockchains. Be it to meet compliance requirements or to convict criminals. Thomas Gregg leads the core EMEA operations and is Regional Director chainalysis.

In the conversation we wanted to know whether anonymous Bitcoin transactions can exist, what crypto mixers like Tornado Cash can do and how transactions on the blockchain can be carried out as anonymously as possible. You can find more exciting interviews in the BTC-ECHO Experts Podcast.

BTC-ECHO: Can there be anonymous Bitcoin transactions?

Thomas Gregg: A lot of people want that, but we can’t speak of anonymity in the blockchain – especially with Bitcoin. One can speak of pseudonymity. That means you hide behind the pseudonym of a wallet address. At first it is not clear which person or organization is behind it. In order to resolve something like this, blockchain analysis is required. But that mainly gives information about what things these transactions have been involved in.

The real person, i.e. the identity, cannot be found out using a blockchain analysis tool. All of the data that we have on our platform is also initially non-personal. It is then really the job of the law enforcement agency to approach the Bitcoin exchange and request the KYC information with the appropriate documents.

What can crypto mixers like Tornado Cash do?

Crypto mixers are other tools that are very commonly used to obfuscate what transactions are all about. That means I put certain cryptocurrencies in the mixer, after which they are mixed once. They are mixed with various other addresses and bitcoins from numerous sources and then issued again. However, in order to run large amounts of cryptocurrencies through the mixer, large amounts of money from other sources are required, which must be deposited in the crypto mixer.

In addition to criminals who want to cover up their activities, there are also activists who are politically persecuted. In that case, how would one make a crypto transaction as anonymous as possible?

Crypto is not the best way to do that. Bitcoin is generally not as anonymous as many people think. There are many ways to understand that, and ultimately that’s a good thing. We see how the regulations in the various countries are becoming ever tighter. That’s not to restrict any people who want good, but to expose the illegal activities.