Blockchain is undoubtedly one of the best innovations of the 21st century. What is at the core of almost any cryptocurrency is the blockchain technology. Blockchain is like a public ledger that records all transactions that ever happened since its creation. All transactions that ever happened in the bitcoin network can be viewed by anyone. Although this is an attractive feature, transparency wise, not everyone wants to broadcast their transaction to the public.
By now, you should know that Bitcoin transactions are not anonymous. It is pseudo-anonymous at best. If anyone links your real-world identity to the wallet address, they can track all transactions you have conducted so far. If you want to store your Bitcoin anonymously, it is not merely enough to use a bitcoin wallet that has strong privacy features; you must also know how to buy and cash-out bitcoin anonymously. You can check out how to buy bitcoin anonymously here and how to cash-out anonymously here.
It’s important to understand that no wallet can guarantee anonymity. Bitcoin transactions can be easily tracked with taint analysis, IP address monitoring, web-spidering, and so many other ways. The best, a wallet can do is to maximize users’ privacy with strong privacy features. Here are some of the Bitcoin wallets that have the strongest privacy features when it comes to storing bitcoin:
Although hardware wallets are more secure than online wallets, they are still prone to various attacks. Hardware wallets are prone to physical attacks, attacks that cause faulty behavior in the chip, and side-channel attacks that involve a hacker listening to chip’s electromagnetic signature.
Ledger uses Secure Element (SE) chips to keep your private keys safe and isolated from all sorts of attacks. Ledger devices are also certified by ANSSI, a French cyber-security agency.
They have taken privacy to a whole new level. As ledger puts it “We are pioneering hardware wallet technology that provides unprecedented levels of security for crypto-assets through a secure element — a chip designed specifically to resist highly skilled attackers and a custom OS designed specifically to protect crypto-assets”.
Here are some of the notable security features used in ledger wallets:
Offline Storage – All cryptocurrencies are stored offline. This keeps your bitcoin safe from the majority of attacks today. If you want to send Bitcoin to someone, you are required to interact with the device physically.
Recovery Phrase and Pin Code – You are given a recovery phrase to recover your funds if you ever damage or lose the ledger wallet. This is a 24-word phrase that is created for you during the setup. Additionally, you are required to set up a security pin to prevent unauthorized access.
Hidden Wallets – You can store a significant amount of your Bitcoin portfolio in a hidden wallet and store a small amount of Bitcoin on your main (visible) wallet.
Generates New Bitcoin Addresses – Ledger automatically generates new Bitcoin addresses every time you deposit funds. This makes tracing Bitcoin transactions harder.
Samourai wallet advertises itself as “A modern bitcoin wallet hand forged to keep your transactions private, your identity masked and your funds secured”.
And yes! This wallet does provide some of the coolest privacy features to maximize security. Some of the notable security features include:
Supports Offline Mode – Samourai wallet works in any network condition; including offline. You can use this wallet to create a secure cold storage.
STONEWALL – This feature makes it incredibly hard for someone to link inputs and outputs of a transaction. Address clustering is a technique used by blockchain surveillance firms to de-anonymize you. Stonewall makes it that much harder.
PayNym – This feature makes sure that you do not share your bitcoin address with anyone other than the sender and recipient of the transaction.
Randomizes Pin Access Screen – This feature randomizes the pin access screen every time you load the app.
Stealth Mode – You can hide the Samourai wallet from the home screen and launcher.
Remote SMS Commands – Samourai enables you to remotely control your wallet with SMS; including completely wiping out your wallet.
Whirlpool – You can cycle your Bitcoin in the whirlpool to break the link between inputs and outputs of Bitcoin transactions.
A paper wallet lacks basic privacy features, even a simple Bitcoin wallet has. However, this type of wallet is strong in terms of privacy because it is resistant to hacks and various spyware.
A paper wallet will essentially cost you nothing to set up and use. As the name suggests, a paper wallet is a piece of paper that stores your Bitcoin’s private and public keys. It is very easy to set up. You can create a paper wallet here. Check out the video below that shows you how to securely create a paper wallet:
To receive Bitcoin to this paper wallet, all you need to do is to give your public key. You do not need expensive, sophisticated software or hardware to handle your bitcoin transactions. The only thing that proves the ownership of your bitcoin is your private key. A piece of software or hardware can keep your private key safe, but they are always prone to hacks and spyware; a paper wallet is resistant to those. However, it is not resistant to fire or water.
This type of wallet doesn’t have sophisticated privacy tools to make your bitcoin transactions anonymous. So, if you want to send and receive Bitcoin to this wallet, you need to know how to make yourself anonymous on the internet. Since it’s a paper wallet, you have to import or sweep your private key to a software or hardware wallet if you want to send someone Bitcoin.
There is a handful of Bitcoin wallets that allow you to import or sweep private keys. These are some of the best ones:
So, to send Bitcoin to someone anonymously, you need to run these wallets on TAILS operating system. Running these wallets on TAILS allows you to broadcast Bitcoin transactions through the Tor network. Tor makes it virtually impossible to track your activity.
Rahakott is a web wallet designed with privacy in mind. You can create a Rahakott wallet without giving any personally identifiable information. Optionally, you can enable 2-factor authentication for additional security. Some of the privacy centered features of this wallet include:
Inbuilt Blender/Mixer – Rahakott enables you to mix your Bitcoin with other user’s Bitcoin. This breaks the trace between who sent and received Bitcoin.
Supports Tor – You can access and interact with the Rahakott wallet using the Tor network.
Unstoppable wallet is one of the few decentralized wallets available for Android and iPhone users. It is an open-source project that works on a peer-to-peer basis.
This wallet does not have KYC or AML. This means that you do not have to give your email, name, mobile number, or any personally identifiable information when creating a wallet.
Using any of the wallets mentioned above does not guarantee privacy. However, these wallets have some of the strongest privacy features we have seen.
It is more than likely that you have signed up for a cryptocurrency exchange that has KYC. You probably have given your email address and name when signing up for these exchanges. If you send Bitcoin from such an exchange to one of the wallets mentioned above, you are no longer anonymous. Using an anonymous wallet is not the one-click solution for staying anonymous; you must also know how to buy and sell Bitcoin anonymously.