Before You Buy Bitcoin – What to Know | Bitcoin investors care a lot about their privacy and security. Anyone who gets the private key to a public address on the Bitcoin blockchain can approve transactions.
Private keys should be kept secret, because thieves may try to steal them if they find out that a person has a lot of money. Be aware that if you use a public address, anyone can see how much money you have. The other side of this public information is that a person can give themselves more than one public address. So, they can put their Bitcoin stash in many different places. A good plan is to keep important investments at public addresses that are not directly connected to ones that are used in transactions.
Anyone, including you, can look at the history of transactions on the blockchain. Even though transactions are recorded on the blockchain, information that can be used to identify users is not. Only a user’s public key shows up next to a transaction on the Bitcoin blockchain. This makes transactions private but not anonymous. In this way, Bitcoin transactions are more open and easy to track than cash transactions because everyone can see them, while cash transactions are kept private. But Bitcoin transactions are also made so that they can be done anonymously. On the blockchain, it is very hard to figure out who sent and who received the bitcoin.
Researchers from around the world and the FBI have said that they can link transactions made on the Bitcoin blockchain to other online accounts, such as digital wallets, of the people who made the transactions.
For instance, when someone makes an account on Coinbase, they have to show their ID.
When that person buys bitcoin in the future, it will be linked to their name. Even if they send it to a different wallet, it can still be linked back to the account holder’s Coinbase purchase. Bitcoin is legal in the U.S. and most other developed countries, so this shouldn’t worry most investors.
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Make sure you know the laws, rules, and taxes in your area about buying and selling bitcoin before you do so.
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