Is Ethereum really anonymous?
A widespread opinion is that ethereum transactions are anonymous. Likewise, ethereum is regularly referred to as anonymous in the media. For example, Ethereum is said to make it easier for criminals to launder money. Or terrorists can finance themselves anonymously with ethereum without governments being able to trace it. But is ethereum really anonymous?
Although it is possible to send and receive ethereum without revealing an identity, all transactions are stored on the public and transparent Ethereum blockchain. Anyone can view the history of a particular ethereum address and potentially identify the person to whom it belongs.
Ethereum Pseudo Anonymity
When you look at the ethereum blockchain, you don't see a single name or any other personal information. However, the network is not completely anonymous. Because, in fact, ethereum and all transactions are very transparent and accessible to everyone.
The Ethereum Blockchain is Public
The public blockchain stores all transactions ever made. So if person A decides to send ethereum to an address of person B, that transaction is forever immortalized in the blockchain for everyone to see.
The Ethereum Address is Pseudonymous
A ethereum address, which is similar to an IBAN, is pseudonymous. In this case, if someone uses the same ethereum address over and over again to send or receive the cryptocurrency, it is relatively easy to track what the person's transaction history is.
Ethereum wallet addresses are cryptographically encrypted in themselves. Thus, one cannot find out any clue about the person behind it. However, when buying ethereum, fiat money must be exchanged for the cryptocurrency. Usually, users have to provide their personal information (KYC procedure) to the broker or exchange. This procedure is called KYC (= know your customer). Therefore, strictly speaking, ethereum is not anonymous, but pseudonymous.
Regulations and Identification
In 2017, ethereum went mainstream. This surge of interest led governments around the world to discuss ethereum's anonymity. One area of focus was identification. Governments wanted brokers and exchanges to conduct identity verification (KYC) of their customers before allowing them to invest in ethereum.
Who and how can Ethereum Transactions be tracked?
The ethereum network records all transactions through the use of the blockchain. In this regard, the blockchain works like a digital and public ledger. Anyone can access it with the help of a Blockchain Explorer and view the individual transactions.
What Data can be determined?
Using the Blockchain Explorer, all transaction-relevant data can be viewed. This includes the recipient address, the sender address, the amount, the transaction date, the time and the amount of the transaction fees paid.
It is also possible to search specifically for transaction numbers and wallet addresses. This makes it possible to view the ethereum balance and the transactions made for each wallet address.
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