Anonymity

Anonymity in cryptocurrencies enables users to send and receive digital assets without revealing their true identity to the other party involved in the transaction, whether they are the sender or the receiver of funds.

When you open a conventional bank account, the bank requires you to provide identity verification details such as your name, social security number, address, and possibly a government-issued ID.

In contrast, outside of centralized crypto exchanges (CEX) that impose similar Know Your Customer (KYC) identity verification requirements as banks, you can send a crypto payment to another individual without ever disclosing any of that information to them or the crypto service facilitating the payment.

Only the two parties engaged in a transaction may know the identities of those on either end of the exchange.

Your identity remains concealed, allowing you to stay anonymous while sending digital assets to anyone with a wallet address, anywhere in the world, without a middleman questioning the details of your transaction, including what you’re sending, how much, to whom, and why.

However, while your identity is kept hidden, not all aspects of the transaction are anonymous and concealed.

Due to the public and permanent nature of most blockchains, the transaction itself is recorded online, “in the cloud,” on the blockchain, indefinitely, accessible for anyone to view.

Details of transactions are visible, including sender and receiver addresses, the amount sent, the time of the transaction, the fees incurred, and the duration taken for verification, although the identities of the address owners remain obscured.

Every transaction made by a wallet address is publicly visible.

This level of transparency is what renders most cryptocurrencies pseudonymous rather than entirely anonymous.

The anonymous characteristics of cryptocurrencies, while not flawless, were among the initial use cases for early adopters on the Dark Web.