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  • Writer's pictureDavid Conquest

Bitcoin and Privacy

Updated: Apr 1, 2021

To start out, think about this little scenario. Imagine that you go into a small shop and buy some milk or a newspaper. Since you’re only spending a pound or two you might pay with cash. That means that no-one, not the shop-keeper, his bank, your bank, your credit card company or any of their middle-men know who you are. If however, you buy with plastic then a whole crowd of companies know everything about the transaction – who you are, where you are, when you spent your money and how much – and once they have that information they’ll use it. Or sell it to someone else. If you buy online then they’ll have even more data about you.

Now, many people are willing to put up with losing that bit of privacy for the convenience and speed of not dealing with cash. My pockets are a lot lighter these days now that everything is on a card or my phone. But even I’m starting to wonder if it’s a good idea that these companies are collecting all the data they can on me and sifting through it to “get to know me better”.

Cash is only practical to a certain point, however. Not many people buy their weekly shop with a wad of twenty-pound notes and even less would try to buy a new car or a house with a suitcase full of cash, so what other choice is there?

Well, that’s one of the reasons Bitcoin was invented.

Bitcoin was designed to have the advantages of both cash and plastic – privacy, fast acceptance and safety but without letting the corporates, banks and all their ‘trusted third-parties’ know what you’re doing. Some people even think of it as an anti-establishment movement. It works for any amount, anywhere in the world. You could use it to get a pizza delivered or to buy a villa in Spain, but without the international fees or waiting for days for it to clear.

Imagine, instead of keeping paper cash in your wallet, you can have cryptocurrency that you access through a wallet on your phone. You can buy things with it or send it to someone almost as quickly as you use cash now, but they don’t have to be in the same room and if you don’t want them to know who you are, then don’t tell them.

Cryptocurrencies are not (generally) controlled by any company or organisation – you are in control. Bear in mind though that the software wallets you use to access your crypto, and much of the software in exchanges, is owned by companies who want to make a profit and they may analyse your data. The question is, are they better or worse than the banks and other middlemen? Some are better than others, do your research.

There are limits too on how anonymous you are. Your Bitcoin addresses for instance don’t include any personal information, but it’s not impossible to track a payment if you already have some information about it and the police certainly have done that to investigate fraud and scams.

Bitcoin was designed to let you take more control of your money, but unfortunately, there will always be those who look for ways to take advantage of the inexperienced.

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