Can Bitcoin Be Traced?


Jonathan Gibson


Reading time

10 mins
Last update


Jonathan Gibson




Reading time

10 mins
Last update


Jonathan Gibson


Reading time

10 mins
Last update


man pressing bitcoin as a button - Can Bitcoin be Traced?

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Over the last years, Bitcoin (BTC) users have asked the question ‘Can Bitcoin be Traced?.” If you don’t want to keep reading, the fast answer is yes. However, there are many ways in which Bitcoin transactions could remain more private and secure. 

There are many ways to trace Bitcoin transactions. But there are also many ways in which we could protect our privacy. If we want to know “Can Bitcoin be Traced?” then we should have a look at the main things we should take into consideration about this virtual currency. 

What is Bitcoin?

Bitcoin (BTC) is the largest virtual currency in the market. It has been created in 2008 and it allows for the transfer of funds across the world without having to rely on intermediaries. Over the last years, Bitcoin reached massively high prices. In early 2021, Bitcoin reached an all-time high of over $63,000 per coin. 

Bitcoin with black background

Bitcoin has been considered to be an anonymous virtual currency that individuals could use to send and receive transfers. However, Bitcoin is not anonymous; it uses pseudonyms. When we use a bank account and we send a transfer, our information (number of account, name and surname) are present. 

When we do a Bitcoin transfer we do not share our name or surname, but we instead use an address (that works in a similar way to a bank account number). Despite the fact that there is no name on the transfer, it is possible to see all the transfers that have been processed in the past, the transactions received and more. 

Bitcoin has also become popular because several companies are purchasing it in order to replace cash on their balance sheets. This has been a very useful strategy throughout 2020 and 2021. It would be interesting to see how this will evolve in the future. 

Finally, there are only 21 million Bitcoins that are expected to be mined in the future and no more Bitcoin will ever exist. Due to all these reasons, Bitcoin became one of the most popular cryptocurrencies in the world and attracted the attention of millions of users from all over the world. 

Is Bitcoin Private?

Bitcoin is not private. As we have mentioned before, Bitcoin works with pseudonyms and all the information about future and previous transactions is publicly available. In order for Bitcoin to work, it uses a technology called the blockchain. If you want to know: “Can Bitcoin be Traced?” then this is very important information you should know.

Blockchain technology works as a decentralized ledger where there is no centralized authority. In order for it to work, it requires miners (located all over the world) to process the transactions and confirm them. For their work, miners get rewarded with BTC coins. 

Bitcoin Volatility Indicator Global Asset - Can bitcoin be Traced?

Blockchain analysis firms, companies and governments usually go to the public blockchain and analyse it in order to get valuable information about transaction trends, network usage and more. Although Bitcoin is not private (everyone could easily check all the transactions being processed by the network), there are some ways to make it more secure for our privacy. 

One of the best ways to make Bitcoin private is by avoiding exchanges, mining your own coins, using a Bitcoin node connected to your wallet (through TOR) and a VPN to protect your information. This is kindly complicated but it is the only way in which we could eventually get more privacy transacting BTC. 

It is worth mentioning that most public blockchains (Ethereum (ETH), Litecoin (LTC)) are not private. Thus, if you want to know “Can Bitcoin be Traced?” the answer is yes, but also other virtual currencies can also easily be traced. Thus, Bitcoin is not the only one that lacks privacy features. 

Can Bitcoin Transactions be Traced?

Yes. Bitcoin transactions can definitely be traced. As soon as we send a transaction through the Bitcoin network, nodes need to confirm the transactions are correct and miners protect the network by processing them. Although this sounds complicated it is done automatically and without even you realizing it. But can bitcoin be traced?

As we said before, Bitcoin works with a public blockchain. It is necessary to have this open information to confirm the transactions are correct and there is no double-spending. Although there are some technical implementations that could be added to the Bitcoin network, we analyse the features of the Bitcoin network nowadays. 

People that start using Bitcoin want to know: can Bitcoin be traced? And as we already answered, yes, Bitcoin can be traced and so transactions. We could eventually follow all the transactions that took place before our coin was mined. In this way, we are able to understand which was the whole life cycle of that BTC, when it was mined and through which addresses they have moved. 

All this information is public and it makes it possible for Bitcoin to be traced without inconveniences. If you were asking: can Bitocin be traced? Then you should know that transactions can be tracked and they could eventually be associated with your name and surname. 

In the next sections, we will also see how Bitcoin purchases can be traced and what we can do to avoid them. If you want to avoid your transactions being traced, then you should use privacy coins. 

Can Bitcoin Purchases Be Traced?

Yes. Bitcoin purchases can be traced by exchanges, companies and governments. Everything will depend on the regulatory environment in which you operate. For example, when you deposit funds to an exchange and purchase Bitcoin, then your Bitcoin purchase will have a name and surname (if the exchange provides this information). 

At the same time, it is possible to withdraw funds from exchanges to our own wallets. Despite these wallets being anonymous, they could be linked to the transaction we have done from the exchange to the wallet. In this way, this wallet that we might have never used could now be traced and linked to our name or even IP address. 

To answer the question: can Bitcoin be traced? We also need to know that our Bitcoin purchases can be traced. This is why it is so important to avoid mainstream exchanges and purchasing BTC from other people. When we transact BTC with another person, this information keeps secret between you and this person, and you don’t share information with third parties about these transfers. 

However, you should know that if you perform such type of transactions, then you should also avoid sending the funds to an exchange. If you do so, your wallet could be again linked to an IP address or to your name or surname. The best way to remain protected and take care of our information is to avoid these mistakes that we could easily make. 

Another way to protect your information when transacting in virtual currencies is by using privacy coins. We will share more information about privacy coins later in this article. 

Interesting: 11 Bitcoin Facts Everyone Should Know

Can a Bitcoin Address Be Traced?

A Bitcoin address can be traced. Bitcoin works as an open network that makes it possible for those that are interested in it, to get information about transactions, wallets, addresses and funds transferred. This is why Bitcoin is not anonymous and might never become (unless a consensus is reached and a network update takes place). 

Bitcoin addresses can be traced, tracked and eventually linked to a specific name or IP address. Fortunately, there are different ways in which we can change our addresses not to be traced all the time. 

Every single time we receive BTC with the same address, it would show the BTC we own, the BTC we have received and the transfers executed. All the information is available. If you publish this information online, you are literally saying that you’d like them to know your wallet information (including your transfers and funds). 

And of course, this is not what we want to achieve. One of the best ways to avoid this problem is by using different wallets. Some wallets offer you the possibility to recycle your addresses. That means that every single time you receive a transfer, your wallet address changes. In this way, it is possible to avoid being traced by third parties or curious individuals. 

Using different wallets and addresses and not sending transfers across them could be one of the best solutions to avoid being traced and tracked by governments, companies or other parties.  

Privacy Coins

There are other types of virtual currencies in the market that help us protect our privacy, identities and information. These virtual currencies are called privacy coins. There are some private digital assets that would protect us all the time, while others offer privacy features on-demand (that means that only when we request it). 

With these coins, we do not have to be worried to share our private information with anybody, as their blockchains might not be 100% public or contain information about the transactions that are processed. This is the best way that we have of processing transactions. 

If you care about your privacy, using privacy currencies is a must. They might offer you better solutions than traditional digital assets and protect your privacy in an efficient way without having to change addresses, information, wallet or anything else. 

In the next sections, we share with you some of the examples there are in the market about digital currencies that protect users privacy.

Monero (XMR)

Monero (XMR) is by far the most popular privacy coin in the market. If you were worried about the question “Can Bitcoin Be Traced?” you can be sure there are some ways to avoid this problem. You can easily use Monero to send and receive transfers without being worried about being tracked by other parties. 

golden monero coin

Monero is a virtual currency that has been operating in the market for several years (it is known as one of the legacy coins) and it has offered reliable and secure solutions for users to process untraceable transfers. In this way, individuals can protect their information, data and identity when transferring funds between wallets, exchanges or with other people. 

This virtual currency is one of the largest in the market and it has been operating among the top 50 largest for years. It is known for continuously improving its solutions and making sure the transactions are not visible to outsiders. Indeed, when you use Monero, the funds you transfers are hidden from others. 

This is the main difference that it has with Bitcoin. While with BTC it is possible to get information about who is sending the transfer, how many BTC are being moved and to which wallet, Monero transactions are completely secure. They do not share this information with anybody else. Thus, only you and the other person (the one that sends or receives the funds) knows about the funds you have transacted. But that’s all the information you share about yourself. 

Litecoin (LTC)

Before we start with Litecoin (LTC), we need to point out that this is not yet a privacy currency. Indeed, at the time of writing this article, Litecoin should not be considered a privacy coin. However, this is also one of the largest cryptocurrencies in the market and developers are working in order to make it possible for LTC to offer confidential transactions. 

Coin of litecoin on the background of numbers adding machine
Coin of litecoin on the background of numbers adding machine. The concept of production or rate of ltc.

The founder of this virtual currency, Charlie Lee, informed that the goal is to bring fungibility to the Litecoin network. This would make it possible for users to send and receive fast, cheap and reliable transfers (using LTC) without having to share information about us. 

Nowadays, LTC works as Bitcoin. However, it is faster and cheaper to use. By implementing MimbleWimble, the team behind Litecoin wants to make it private and easy to send and receive. Exchanges would have the option to activate private transactions or to keep with the current functionalities of the network. 

However, many independent wallets and projects might include the option for users to select whether they want to send or receive private transactions. It is also worth mentioning that exchanges have now the possibility to decide which LTC or BTC are accepted and from which addresses. This happens because they have to comply with AML and KYC regulations. Some BTC and LTC tokens have been associated with addresses that they claim are not compliant with AML and KYC. 

About the goal of making Litecoin private, Charlie Lee commented:

“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.”