ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Digital Cash - A Beginner's Guide to Anonymous Digital Currency

Updated on June 22, 2014

Bitcoin and Anonymous Digital Cash

Since the early days of Bitcoin when it became popular as the payment option of choice on the 'darknet' and amongst the merchants of marketplaces such as Silk Road, where buyers could browse through listings for a wide range of illegal drugs and firearms, digital currency - and Bitcoin in particular - has earned a reputation amongst the general public as a way to pay for things anonymously over the internet.

In many ways Bitcoin came to be viewed as if it were a kind of digital cash. Of course cash payments have always been the preferred payment method of choice amongst criminals because of its anonymity, but for the same reason it is also valued by regular members of the public who value their privacy and find the constant monitoring and recording of everything we do on the internet by both governments and corporations to be creepy and unpleasant. There are also other similarities between Bitcoin and cash, as with a wallet installed on your own computer you control your own coins and spend them without needing to have an account with a third party like a bank who can then impose charges on you for using your own money or risk your hard earned money on risky 'casino banking' trades.

But in actual fact Bitcoin is not as anonymous as its reputation suggests. You can create a Bitcoin wallet on your computer as anonymously as you can download any other piece of software from the internet (i.e. superficially anonymous, but fairly easily tracked and associated with your identity by either governments, hackers, or tech firms involved in things like advertising or selling data). But once you have your wallet, every transaction that you make with it - both money received and money spent - is a matter of public record. In this way Bitcoin is not really the shadowy anonymous money it is made out to be, but rather it is characterized by a kind of radical transparency. Bitcoin transactions can be viewed by anyone with access to the internet - you just need to go to a blockchain explorer website; this is not something which you can do for transactions from a bank account, let along cash transactions.

If you want to use Bitcoin anonymously then you must take some extra measures to protect your privacy, or alternatively you can use one of the new breed of anonymous digital currency projects which offer improved privacy.

Using Bitcoin for Anonymous Payments

If you are serious about protecting your privacy when using Bitcoin then you need to start thinking about it right from the start when you create your new wallet. Using a darknet service such as TOR, and even a proxy service too, can help to make sure that the wallet you are using cannot be associated with your identity in any way.

Once you have your wallet set up and you want to send a payment to someone without taking the risk that it could be tracked and recorded by someone, you need to start using a 'coin mixing' service. Basically these services work by mixing your payment up with those of other customers of the service, so that your actual coins get bounced around between different addresses and merged with coins from other transactions before being sent on to their eventual destination. For small and medium sized payments this can be very effective, although it does not work so well for larger payments because it is hard for the mixing service to get enough coins from other transactions to effectively mix up your payment.

If you want to buy Bitcoins anonymously for fiat then services such as eNumbered will provide you with everything you need. In fact, that particular website even offers an anonymous ATM card to withdraw cash from almost any ATM worldwide with complete anonymity!

Anoncoin

Anoncoin was the first digital currency to focus its development completely on providing the maximum possible privacy to its users. This alternative to Bitcoin aims to be the first to provide complete anonymity by integrating its own software as closely as possible into 'darknet' services such as TOR and I2P.

If you use Anoncoin, with its built in coin mixer and the upcoming implementation of 'zerocoin' technology, to make payments over the darknet its creators claim that "even if the blockchain is studied in detail there will be no way to tell which coins belong to what wallet, nor any kind of ID".

Dark Coin

Darkcoin markets itself as digital cash, and users can choose whether to make payments publicly or anonymously from their wallet.

Currently Darkcoin is the most popular of all the privacy centric digital currencies. In addition to mining, you can earn darkcoins by running a 'masternode' for the network.

Darkcoin claims to be the 'first anonymous digital currency'. This claim has always made me distrustful of this coin, as I haven't been able to find out what facts they back up their claim with. They weren't the first coin to focus on anonymous payments, as that was anoncoin, and they weren't the first coin to integrate a built in coin mixer into the wallet, as that was FedoraCoin TiPS.

Their 'dark send' feature is, however, undoubtedly one of the best products on the market.

FedoraCoin

Fedoracoin TiPS is not specifically built with privacy or anonymity as the main function. It is actually a tipping currency, designed for sending 'micropayments', or small tips, to people over the internet.

It is well worth mentioning, however, as they were the first coin to integrate a coin mixer directly into their wallet and still to this day offer a solid privacy service to anyone who wishes to use it.

Cloak Coin (and others built on same protocol)

Cloakcoin has introduced a more decentralized way to provide anonymous transactions, which does not require 'masternodes' but instead uses every node - every wallet - on the system. This could potentially make cloakcoin less suscpetible to privacy breaches by determined agencies such as governments.

Comments

    0 of 8192 characters used
    Post Comment

    • FlourishAnyway profile image

      FlourishAnyway 

      4 years ago from USA

      I find the whole notion fascinating regarding who may be tracking whom and the hoops people have to jump through to maintain their privacy. At least there is a way to do it!

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)