It is a topic of concern whether the privacy and anonymity of Bitcoin still exists.

How the wallet client works

General wallets can be divided into light-node wallets and full-node wallets. Full-node wallets need to download the entire block from the first block to the latest block to the local wallet. Generally, this kind of wallet takes up a lot of storage space. , So most of them run on a computer, and most people basically don’t use a full-node wallet because the blocks must be synchronized continuously, otherwise the wallet will not be able to conduct transactions.

Light node wallets generally only download block records related to the wallet address. With the rise of mobile phones, current mobile wallets have been improved on light node wallets through a dedicated node server (which can also be considered as the ip address of a full node wallet) (And corresponding ports) provide wallet balance and transaction information query and traversal services, and block records are almost not downloaded locally, especially bitcoins such as mobile wallets.

In this way, nodes that provide specialized information services are very critical. For example, infura on Ethereum is a very wide range of node providers. Through such node services, the wallet can know the address balance and other information. , You can also broadcast transaction information through this service.

In fact, mobile wallets and light wallets on some computers basically rely heavily on the node server. If the node server is broken, it is basically impossible to obtain the latest balance information, and it is difficult to broadcast information externally. Unless you have equipment that specializes in broadcasting, you cannot conduct transactions.

In fact, the main task of the wallet is to construct transactions and broadcast transactions. For full-node wallets, because the blockchain nodes are connected point-to-point, in general, full-node wallets not only broadcast their own transactions to the entire network, but also It is necessary to download block records from other nodes synchronously, so that these records are packaged by a dedicated miner, and finally the confirmation of the transaction is completed.

The same is true for hardware wallets. The hardware wallet uses a dedicated hardware chip to sign the transaction, and then broadcasts the transaction through the ordinary client through data transmission, so that the transaction can be confirmed naturally.

Here we actually found that the main function of the wallet is divided into three steps. The first is to construct and sign the transaction, the second is to broadcast the transaction, and the third is to obtain the latest transaction information and balance from other nodes/servers. All of this requires the transmission and interaction of information between the local device and other devices on the network. When information is transmitted, an IP address is inevitably needed to transmit information, and it is naturally possible to expose the IP address.

Is Bitcoin's security and anonymity threatened?

First of all, we talk about security. Bitcoin is essentially a distributed ledger, and our wallet is actually a private key. The wallet address can be known through the private key, and the bitcoin ledger is to record the information about the sending and receiving of the wallet address. In terms of security, unless the private key is leaked or the device with private key information is controlled, no one can take our bitcoins. In other words, if you lose a mobile phone with a Bitcoin wallet, you should be careful in theory. This is not caused by Bitcoin, but because you lost your mobile phone, just like you left your house. If the key is lost, you should change the lock in time.

Many people say that Bitcoin has anonymity. This sentence itself is correct, but because of the current living environment, the anonymity has been weakened. In essence, our Bitcoin is actually the correspondence between the private key and the address. If you do not reveal your address, then your Bitcoin can be said to be anonymous. If you do, it is obviously not anonymous. With the development of supervision and big data in various countries, professional institutions have analyzed the behavior of transfers on the Bitcoin chain, which makes many addresses actually able to correspond to a specific person.

So how to maintain the privacy of Bitcoin? In fact, the best way is to change the wallet once when you use it. In short, if someone transfers the account to us once, we change the wallet address once. The advantage of this is that others only know our current address, so anonymity is naturally maintained.

If you want to find out who the unknown address belongs to, then you have to ask the owner of the known address. If a clue is broken, that is, the owner of one of the unknown addresses is not found, then From the beginning of this unknown address, all transactions are anonymous, unless an address later rushes the coins to another exchange, and then the exchange obtains the corresponding user information.

In short, if you use it carefully, then Bitcoin is a good tool for anonymity. If you accidentally or deliberately leak your wallet address, then it is naturally not anonymous at this time.

to sum up

In fact, Bitcoin and other cryptocurrencies are actually just a tool, and whether to remain anonymous, or whether our own private information is leaked, in fact, most of them are related to our own conditions of use. On the one hand, the Bitcoin network is Distributed applications built on the existing Internet, so many technologies are still unable to get rid of the existing Internet system, such as IP addresses, etc., which may become things that reveal their own identity. On the other hand, Bitcoin uses Anonymity and it is only limited to the premise that we deliberately want to keep our address information invisible, and after these two factors are well resolved, the security of personal asset information can be guaranteed.

I personally believes that the main reason why the current digital currency is easily labeled as accomplices of money laundering and crime by the traditional media is actually the anonymous nature of the cryptocurrency, but on the other hand, we must not lose the right to use cryptocurrency to protect our privacy and prevent excessive supervision or malicious attacks by authorities. This is also what core developers need to consider.