If you dive into Bitcoin’s history, you are inevitably going to detect the darker aspects of the cryptocurrency.
Dylan Buckley who has practice working for and investing te Bitcoin spil well spil other Cryptocurrencies such spil Litecoin and Dogecoin fills us te on some of the darker aspects of Bitcoin. Dylan Buckley is a freelance and self-help writer from Southern California.
Prior to its adoption by much of today’s society, Bitcoin wasgoed used to make illegal dark web purchases on a webstek known spil Silk Road. Many of the customers and sellers on the dark web drug toneel used Bitcoin to make “anonymous” transactions. However, fairly a few of the illegal transactions were traced and the criminals were apprehended with ease.
This begs the question, how anonymous is Bitcoin? Is it safe to make thesis illegal transactions? Can one truly stay off the grid and avoid taxes with this cryptocurrency? Albeit I don’t endorse or condone this type of behavior, I will discuss whether or not it is possible to remain entirely anonymous using Bitcoin.
Let’s Look At How the Bitcoin Webstek Addresses the Concern of Anonymity ter Regards to Illegal Transactions…
Te the FAQ section of the Bitcoin webstek, this is what the developers say about Bitcoin and anonymity:
“Bitcoin is designed to permit its users to send and receive payments with an acceptable level of privacy spil well spil any other form of money. However, Bitcoin is not anonymous and cannot suggest the same level of privacy spil contant. The use of Bitcoin leaves extensive public records. Various mechanisms exist to protect users’ privacy, and more are te development. However, there is still work to be done before thesis features are used correctly by most Bitcoin users.
Some concerns have bot raised that private transactions could be used for illegal purposes with Bitcoin. However, it is worth noting that Bitcoin will undoubtedly be subjected to similar regulations that are already te place inwards existing financial systems. Bitcoin cannot be more anonymous than metselspecie and it is not likely to prevent criminal investigations from being conducted. Additionally, Bitcoin is also designed to prevent a large range of financial crimes.”
Spil you can see here, even the developers have stated that those who are using Bitcoin for illegal purposes are subject to criminal investigations. Those who are using substantial amounts of Bitcoin for illegal transactions are even more likely to be discovered. If you know about the blockchain technology that Bitcoin uses, you may be thinking, how are authorities able to trace criminals only using a wallet address?
How Authorities Track Illegal Bitcoin Transactions
On the Science Tv-programma blog, there is a superb picture that explains how authorities use blockchain technology to track down users.
Not only are all your transactions recorded on a single ledger but authorities are also able to trace wallet addresses to certain IP addresses. You could, te theory, use what’s known spil a Bitcoin mixer to scramble your Bitcoins with other Bitcoins and send them to another wallet that you own. However, this type of activity is often noticeable and will come into question if you are making illegal transactions. You could also attempt using different wallet addresses for every transaction you make. Still, your IP address will be tied to each transaction.
No matter what attempts a criminal makes to voorkant their tracks, Bitcoin is traceable and all transactions are public. It’s much lighter to pay your taxes and adhere to Bitcoin laws than it is to attempt to avoid the authorities. One way or another, your activities will be discovered and you will be prosecuted to the fullest extent of the law.
Is it Even Worth Attempting to Avoid Your Taxes?
Ter some countries, people may be using Bitcoin for political or economic reasons. Ter my opinion, it is acceptable to use Bitcoin ter order to get through ter some countries and you may very well need to fly under the radar using cryptocurrencies. However, ter other countries, it is not necessary or even reasonable.
Let’s take into consideration the current Australian Bitcoin tax laws. When Bitcoin wasgoed eventually noticed by tax authorities te Australia, it wasgoed considered an intangible property by the country. Therefore, Bitcoin users were coerced to pay twice, sometimes even three times the amount of normal taxes.
For example, let’s imagine that you purchased a pair of socks on the internet using Bitcoin. Not only would you pay the normal tax for the pair but you would also be paying taxes for trading the cryptocurrency. If you were earning Bitcoin from employers or another source, you would then be paying income taxes, normal sales taxes, and property taxes.
Recently, however, the tax laws ter Australia have switched. Bitcoin is no longer treated spil property. The government now treats the cryptocurrency spil regular money and it is taxed te the same style spil normal currency. This switch took place ter July of 2018 and current users spil well spil fresh users will have no need to avoid taxes. Bitcoin is essentially the same spil Australian currency.
To give you some perspective, Bitcoin laws ter America are similar to older Australian tax laws. Bitcoin is still taxed twice or three times spil much and it is much tighter to justify using or investing ter the cryptocurrency. While wij are presently pushing bills that will help the Bitcoin economy thrive and make it lighter for interested individuals to adopt, it is still not a legitimate currency.
Australians have the chance to take advantage of this revolutionary technology and can do it without having to worry about being overtaxed. Take this chance and run with it. Make your Bitcoin, pay your taxes, and go after your government’s Bitcoin rules. There is no need to avoid tax laws and the consequences of doing so far outweigh the supposed benefits.
Some people do need to maintain their anonymity. For whatever reason, there is a legitimate need for some to be anonymous when using Bitcoin and even when using the internet ter general. If you are one of thesis people, here are some ways that you can keep your Bitcoin activity private:
- Use Different Wallet Addresses for Every Transaction- No matter what type of Bitcoin wallet you use, there is always an abundance of different wallet addresses associated with your wallet. Every time you need to receive money, generate a different wallet address. This way, it isn’t so effortless to determine the amount of money that is going into your wallet through the blockchain.
- Hide Your IP Address- It’s not wise to let your IP address be associated with your transactions. You can prevent this from happening by using TOR, a virtual private network, or by going to public locations that have WIFI and doing Bitcoin-related activities there.
- Purchase Privately, Mine, or Earn Your Bitcoins- Purchasing Bitcoins using private information is going to expose your identity. Instead, purchase Bitcoins from private sources, earn Bitcoin through jobs, or mine your own Bitcoins.
If you need to remain anonymous for good reasons, it is possible. If you are attempting to engage ter illegal activities, anonymity is unlikely. Stay safe and use Bitcoin wisely or be ready to overeenkomst with the consequences.
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. Spil this information is not advice and has bot ready without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/registeraccountant te relation to taxation decisions. To the extent permitted by law, wij exclude all liability for any loss or harm arising ter any way.