In order to preserve your own privacy and the privacy of other Bitcoin users, it helps to know how to use bitcoin anonymously. The more of us who actually use bitcoin anonymously, the more privacy we all gain as a network if users. If you follow any of the steps I have outlined below, you will increase your privacy. If you implement all of them, you will be using bitcoin as anonymously as you possibly can.
Is Bitcoin Anonymous?
The short answer? No. But you can achieve almost perfect privacy if you’re willing to take the steps outlined in this article. Keep in mind that privacy and anonymity are on a spectrum and it takes time to put all of these methods into practice.
One of the most common myths about bitcoin is that it’s anonymous, but that isn’t automatically true. Due to bitcoin’s public nature, bitcoin is not anonymous by default. It is only pseudonymous, because all bitcoin on the blockchain is associated with a unique Bitcoin address, and you can associate every Bitcoin address with a physical identity if you’re not taking adequate steps to protect your privacy.
While bitcoin can be private in spite of being completely public, it absolutely requires some technical understanding for Bitcoin users to implement. Since bitcoin is completely public and visible to the whole world, it’s actually incredibly easy to follow the flow of money on the blockchain. In fact, the purpose of the blockchain is to make each any every transaction on the blockchain public, in order to prevent double spending and ensure that the total supply of bitcoin is precisely what it should be.
Even though all transactions on the blockchain are public and just pseudonymous, it is still possible to use bitcoin anonymously by cutting off all ties to your real-world identity or spending habits with any Bitcoin addresses that you control. Just follow these Bitcoin privacy practices to disconnect your stack from your real-world identity and use bitcoin as anonymously as you possibly can.
The Journey To Using Bitcoin Anonymously
For the sake of this article, I am going to assume that you are not stacking your first sats and that you’ve learned why using bitcoin anonymously is important. You may realize that your current Bitcoin stacking method is not as private as you would like and you’d like to improve on that.
Using bitcoin anonymously isn’t something that automatically happens. It requires some work on your part before you buy bitcoin, while you own it, and how you send it. If you don’t take a few necessary steps, it’s possible to lose anonymity that you may gain by employing tools and methods in this post. It’s possible to lose anonymity with poor privacy practices like not running your own Bitcoin node or carelessly merging inputs when you create transactions, etc.
While there are probably multiple ways to use bitcoin anonymously, the methods I have outlined in this article are what I believe to be one of the easiest for the average user. With constant advancements and improvements happening all the time in bitcoin, there will almost always be ways to increase your privacy and anonymity, and further position yourself for hyperbitcoinization.
Protect Your Privacy Before You Buy Bitcoin
Throughout your quest to learn how to use bitcoin anonymously, you will spend countless hours reading articles, watching tutorials, asking questions on forums, reading books, and so much more. To best preserve your privacy while you are doing all of your research, you will need to preserve as much privacy as you can while you are learning. That means that you need to do all that you can to mask your online fingerprint while you are learning and researching all about bitcoin.
Use A VPN
Using a VPN is a good privacy practice even if you aren’t learning how to use bitcoin anonymously. It’s just a good tool for helping you to preserve privacy while browsing the web and also gives you the ability to access content that you might be prohibited from viewing otherwise.
There are multiple VPN services that accept bitcoin as payment and even offer a discount. Mullvad is one such VPN that only costs $5 per month, doesn’t collect any of your personal information, and only gives you a 16 digit account number to access your account from up to 5 devices. You can generate a completely new account every month and make a completely new bitcoin payment without having to provide any of your personal information. That is a pretty powerful tool to substantially increase your privacy.
Since Mullvad doesn’t collect any of your personal information, it’s a great way to spend doxxic CoinJoin change.
Even if you have no interest in learning how to use bitcoin anonymously, you should still use a VPN for all of your web browsing.
Use Tor
While Tor (The onion router) may be little more than a slow VPN nowadays, people still use Tor to preserve their privacy for a long time. inclduing bitcoiners, normies, journalists, activists, and anyone else with limited access to the internet. Others use Tor to hide the location of Bitcoin nodes and access hidden parts of the internet.
The Tor browser is required to access some of the best platforms to buy non-KYC bitcoin like Robosats and Bisq as well as a number of different full node operating systems like MyNode and Umbrel.
Tor is not the silver bullet of browsing privately online but it is free and a valuable tool for those who are unable to purchase a VPN service. If you use both Tor and VPN services, your privacy online will increase substantially.
Use A Privacy Browser
Almost every website that you go to today will attempt to cookie your browser so that it can track you across other websites to serve you more targeted ads and otherwise deanonymize you online. Using both a VPN and Tor are a great step forward in preserving your privacy but using a privacy browser will help you protect you from the sites that you actually visit from using cross-site cookie tracking.
Use a privacy focused browser like the Tor Browser, Brave Browser, or the Mullvad Browser to protect your privacy by preventing sites that want to tag your browser with cross-site cookie trackers.
- The Tor Browser: One of the original privacy focused browsers that uses tor by default and has default settings that don’t violate your privacy.
- Mullvad Browser: The Mullvad browser is a browser that was made in collaboration with Tor to help increase default privacy for all of its users.
- Brave Browser: A privacy-focused browser that also has its own privacy-centric search engine, ad blockers, and the ability to control how much of your personal information you allow sites to collect on you.
Keep in mind that there are certainly alternatives to the browsers I’ve shared here, but these have worked well for myself over the years.
Quick Recap: Before I jump into some of the more technical details of how to use bitcoin anonymously, you can start to preserve your privacy right now simply by downloading and using a browser that is focused on protecting your privacy. If you want to go a step further than that, you can pay ~$5 for a VPN every month that will help to mask your IP address while you browse the web and learn all about bitcoin.
Run Your Own Bitcoin Node
The first and most important step to learning how to use bitcoin anonymously is running your own Bitcoin node. If you aren’t running your own node, then you have no real chance of using bitcoin anonymously because each and every time that your wallet needs to check the balance of each of your bitcoin addresses, it needs to ask a bitcoin node. If that node is not your own node, then you have to assume that you are asking a honeypot node run by a chain analysis company or a government actively working to break down the privacy and anonymity of bitcoin.
When you request the balance of your bitcoin addresses from any random node online, you cryptographically associate all of those addresses with each other. This is especially bad for your privacy because if your wallet has a mixture of both KYC and non-KYC bitcoin. That is VERY BAD for your privacy. It might compromise it completely depending on whether or not any of your bitcoin addresses contain KYC bitcoin.
I will go into a little more detail on connecting your node to your wallet below but for now, it’s important to know that “No node = no privacy”. It’s that simple. If you buy, mine, or accept bitcoin anonymously, the next step is to send it to your own wallet but if that wallet is connecting to an unknown third-party node, then you have no real expectation of privacy because the node that you are asking knows your xPub key and all of the addresses in your wallet.
One of the best reasons to run your own node is so you don’t need to rely on anyone but your own node to update all of your address balances. I will go into more detail on how to connect your wallet to your own node but if you’re not running your own node, you can’t have an expectation of privacy.
Finally, when you run your own Bitcoin node, not only do you increase your own privacy substantially but you also marginally increase the privacy of every other Bitcoin user. Any Bitcoin address that can not be identified as yours could potentially belong to someone else. If a Bitcoin address is identified as belonging to you, then it does not belong to someone else and every other bitcoiner in the world loses a tiny amount of privacy. This one can be difficult to grasp at first but the more people that run their own node, the more privacy we all have as a network.
As soon as you are running your own node, the next step is to get your Bitcoin wallet all setup for maximum privacy and anonymity.
How To Set Up An Anonymous Bitcoin Wallet
Not all Bitcoin wallets are created equal. Some wallets are completely free open source software which means that they will not require any of your personal info to use and that the code can be audited and used without permission. Other Bitcoin wallets are closed source centrally controlled companies who are trying to generate a profit. In today’s data-driven world, a big part of what drives profits is monetizing user data in one way or another. If you’re not careful, your data may be part of how your Bitcoin wallet generates revenue.
To protect your data, make sure that you use an open-source anonymous Bitcoin wallet that doesn’t require you to provide any of your personal information to use it. This can be through a combination of non-KYC software wallets and hardware wallets.
Non-KYC Software Wallets
An important part of learning how to use bitcoin anonymously is not giving your wallet any personal identifying information. This can include things like your name, address, phone number, email address, government ID, or biometric data. Some wallets might require you to provide an email address or phone number to use as a recovery backup. Avoid using these methods because they can be linked to your real-world ID.
Using a Bitcoin wallet should only require your 12-24 word seed phrase and any passwords or passphrases that you choose to use. If you need to provide any additional information, you increase the risk of that data being compromised, which can de-anonymize your Bitcoin holdings.
Almost all of the Bitcoin wallets (mobile wallets, desktop wallets, and hardware wallets) on this site will not require you to provide any personal information to use the wallet. Some may give you the option to provide an email address or phone number to use as a wallet backup in the event that your wallet is somehow lost, damaged, destroyed or otherwise deleted. If your wallet requires you to provide any of your personal information, then it is not possible to use that wallet anonymously.
Non-KYC Hardware Wallets
Some hardware wallet manufacturers may require you to provide some of your personal information when you purchase a hardware wallet such as a shipping address, email address, or other personal information. When you purchase a wallet like this, do what you can to send it to an address that is not directly linked to your real-world identity and use a burner phone number and email address if they are required fields. This will protect you from any potential attacks in the future as well as prevent any links between your real-world identity and your Bitcoin wallet.
In June of 2020, the popular hardware wallet, Ledger, was compromised and the personal information of their customers was leaked online in one of the largest data leaks in bitcoin’s history. According to a statement from Ledger’s CEO, “approximately 1 million email addresses had been stolen as well as 9,532 more detailed personal information (postal addresses, name, surname and phone number)” in the breach.
If you do not provide any of your personally identifying information to a hardware wallet manufacturer, then you do not have to worry about it being compromised in an external hack or internal leak. If you want the highest level of anonymity, it’s best to build your own hardware wallet from parts that you can purchase over the counter such as a SeedSigner, Specter, or something similar.
Connect Your Wallet To Your Own Node
Before the time comes to actually start stacking sats and sending them to your wallet, you need to make sure that your wallet is not connecting to any third-party Bitcoin nodes to update address balances and broadcast transactions. Not only is it important to provide the least amount personal information when you use a software wallet, it’s also important that you don’t provide any technical information when you setup and use your Bitcoin wallet either. Some hardware wallets require you to connect to their services to initialize or setup the device (Trezor, Ledger, KeepKey, and others). This means that not only do you need permission from a third party to use your own Bitcoin wallet, they also know your IP address (if you’re not using a VPN) and have a copy of your xPub key which enables them to see the balance of every one of your Bitcoin addresses. That is terrible for privacy and can be used to de-anonymize all of your bitcoin.
To use bitcoin anonymously, you need to use a Bitcoin wallet that doesn’t require any of your personal or technical information like your IP address or xPub key.
Another Quick Recap: At this point, you have downloaded privacy focused web browsers and use a VPN so you can continue to research and learn more about how to use bitcoin anonymously. You have downloaded a free open source software wallet and connected it to your own node so you can send/receive bitcoin without needing to trust any third-party nodes. You may have also purchased the raw components necessary to build your own hardware wallet and/or purchased one from a company that (claims to) preserve their customer privacy and had it shipped to an address that is not directly related to your real-world identity.
Now it’s time to generate a seed phrase.
Get Your Anonymous Seed Phrase
Aside from very niche and specialized Bitcoin wallets, most of them generate a seed phrase for you and prompt you to write down the seed words.
The issue here is that you have no real way to verify that the seed phrase is authentic and not predetermined by the wallet provider. Not only is it more secure for you to generate your own seed phrase because you can use all of your own entropy, but it also ensures that you are the only one who knows your seed phrase.
I personally use SeedSticks and a SeedSigner to generate my own seed phrases in a completely private and air-gapped environment. Unfortunately, due to global supply chain and manufacturing issues, the Raspberry Pi that the SeedSigner is built on is currently unavailable. Currently, the most easily accessible way to generate your own seed phrase in an offline air-gapped environment with a readily available hardware wallet device is with a ColdCard and 99 dice rolls.
When you generate your own seed phrase, you can do so entirely privately and anonymously because you are only relying on mathematics, nothing else. There’s no need for any trusted third parties.
Once you have completed all of the above steps, now it’s time to stack some anonymous sats.
How To Buy Bitcoin Anonymously
Buying bitcoin anonymously is the absolute best way to get your hands on non-KYC sats, but it’s not a simple task. Since KYC regulations are so strict around the world (and getting increasingly tighter), there aren’t plentiful options on the market to buy bitcoin anonymously. Whenever you find a tool or onramp to buy some bitcoin without having to surrender any of your personal information, you should do all that you can to stack as many sats as you possibly can before that window of opportunity closes.
Typically, if there’s an easy or convenient way to buy bitcoin anonymously, it will come with high premiums because there will naturally be more people buying up those private sats. The more complex and difficult the steps are to buy bitcoin anonymously, the fewer people who are buying them up which usually results in lower premiums.
There are a few ways that you can buy bitcoin anonymously, ranging in levels of complexity. I’ll start with the easiest before moving into the less accessible options.
Buy Bitcoin Anonymously From An ATM
Bitcoin ATMs are heavily regulated all over the world but occasionally you might be able to find one that will allow you to buy bitcoin anonymously and not provide any personal identifying information at all. In the event that you do find a private Bitcoin ATM, be careful who you tell about it so that it doesn’t become so popular that it gets removed.
Some Bitcoin ATMs will require you to provide a phone number to buy bitcoin. If you provide your own personal phone number associated with your legal identity, you lose any chance at anonymity. In order to buy bitcoin anonymously from a Bitcoin ATM that requires a phone number, you will need to use a burner phone number. Here are some services that bitcoiners have used for text message verification to buy bitcoin anonymously from an ATM.
- Silent Link offers the ability to use bitcoin to buy a phone number in the US or UK for 1 year for around $60 per year + monthly fees for service.
- SMS 4 Sats enables you to receive a simple verification text for a few thousand sats. If you never receive the verification text, your sats are automatically returned to you.
In order to buy bitcoin anonymously from an ATM that requires a phone number, you need to buy one of these burner numbers to receive a verification text and then input the verification number into the ATM to receive the bitcoin.
It’s also possible that these ATMs might have some sort of front facing camera to take a picture of everyone who makes a purchase so it might be a good idea to take advantage of the remnants of Covid hysteria and wear a mask when you make the purchase.
If you manage to find a Bitcoin ATM that doesn’t require you to provide any information whatsoever, all you need to do is buy some bitcoin and have it sent to your Bitcoin wallet. This is the holy grail of bitcoin buying options.
Buy Bitcoin Anonymously Online
Buying bitcoin anonymously online requires a bit more work because our computers have all sorts of our personal information as well as our IP address which is absolutely tied to real world identities through the companies that have a monopoly on providing us with internet service.
In order to buy bitcoin anonymously from any of these online services, you need to do everything that you can to mask your identity. At the very least, that means that you use a VPN and/or Tor when you access the services that sell bitcoin online.
Here are some of the most popular peer-to-peer exchanges for buying bitcoin anonymously online.
You can find a complete list of all of the non-KYC platforms to buy bitcoin anonymously online at KYC Not Me.
- Bisq: Bisq is a privacy-focused and open-source peer-to-peer exchange that users can download as a software to connect buyers and sellers. As a trustless peer-to-peer network, Bisq doesn’t require any Know-Your-Customer (KYC) information, and Bisq doesn’t hold any user’s bitcoin. Instead, it’s held in 2-of-2 multisig escrow addresses that the traders manage themselves.
- HodlHodl: HodlHodl is another great option. Like Bisq, HodlHodl doesn’t require KYC information, and it doesn’t hold users’ funds, but stores them in multisig (P2SH) contracts. Unlike Bisq, however, HodlHodl is Bitcoin-only, which may be preferable to avoid additional complexity.
- RoboSats: RoboSats is a free and open-source peer-to-peer exchange on Tor. For Tor natives and newcomers alike, RoboSats provides plenty of resources up front to get familiar with; and all you need is the latest version of Tor and a lightning wallet to get started.
- AgoraDesk (Affiliate): AgoraDesk is another great option to buy bitcoin anonymously that lets you choose from a wide variety of payment methods, like: PayPal, credit/debit card, bank transfer, gift cards, Venmo, or even in-person with cash. There’s plenty of flexibility to choose the right payment method that works for you.
Don’t Forget: Accept Anonymous Bitcoin Payments!
While not purchasing directly, I can’t count the number of times I have said that accepting bitcoin as payment is the best way to stack sats. When you accept bitcoin as payment, you aren’t required to provide any KYC data, and you’re also helping to grow the circular economy, which is one of the crucial steps to hyperbitcoinization.
When you accept bitcoin as payment, all you need is a free open source Bitcoin wallet. No names, no phone numbers, no addresses, no national identity numbers, or any other KYC nonsense. If you ever have the opportunity to accept bitcoin as payment, I strongly suggest that you take that opportunity because it’s good for you, it’s good for the person paying you, and it’s good for growing bitcoin’s circular economy.
At this point, you have either accepted some bitcoin, or purchased some either from an ATM or with one of the online tools mentioned above. In order to actually own that bitcoin, you need to send it to your own wallet, but not just any wallet will do. You need to use an open-source wallet that doesn’t collect any personal information about your real-world identity or any technical information about your bitcoin.
Now it is time to use bitcoin anonymously.
How To Use Bitcoin Anonymously
After receiving bitcoin anonymously, whether that’s through you buying directly and withdrawing to your wallet, or someone else paying you in bitcoin, you need to connect your wallet to your own node and practice good privacy when receiving it.
Once you have completed all of the steps above and finally have some anonymous sats, now comes the time to use bitcoin anonymously so that you can protect all of the privacy that you have maintained so far.
Create A New Address For Every Transaction
One of the easiest ways to increase your own Bitcoin privacy and the privacy of other Bitcoin users is to generate a new address for every transaction that you receive. This is called an HD wallet (HD stands for hierarchical deterministic) and they have been the default for most wallets ever since BIP32 was adopted as an industry standard.
By generating a new address every time to receive a Bitcoin payment, you help to prevent address clusters and reduce social graphs that are built on the blockchain. If you want to receive payments publicly and you don’t want anyone to be able to just look up your Bitcoin address on the blockchain to see what other addresses you have been interacting with and how much bitcoin you have, you can use a PayNym.
Use CoinJoin
CoinJoin is one of the most important tools to use bitcoin anonymously because it is what makes it statistically improbable for any chain analysis companies to know for sure which addresses and UTXOs belong to you.
As soon as you have bought or accepted non-KYC bitcoin, the next step is to make it to break the link between that particular UTXO history and any future spending. That’s where CoinJoin comes in.
- Whirlpool: Samourai Whirlpool is one of the most popular CoinJoin implementations. It divides UTXOs of all different sizes into UTXOs that are all the same size and then mixes them with other UTXOs of the exact same size. With each new whirlpool transaction, new UTXOs are introduced into the mix which makes it more difficult for chain analysis companies to figure out who owns which address.
- PayJoin: PayJoin is a payment method of adding additional inputs that belong to the recipient of a transaction. This makes it more difficult for on-chain analysis to know for sure who owns which inputs as it breaks the common input ownership heuristic.
- JoinMarket: JoinMarket is a marketplace of bitcoin hodlers who use their bitcoin to earn fees. Those who simply want to use JoinMarket to increase privacy can pay a small fee to mix their bitcoin with others (market takers) while those who want to earn bitcoin fees can collaborate by offering their bitcoin to create collaborative Bitcoin transactions (market makers). If you want to make a private CoinJoin payment using Join Market, you can pay a small fee to take part in a collaborative transaction.
If you are running you own node and using CoinJoin, you make it statistically improbable (or even impossible) for chain analysis companies to know which addresses belong to you. Not only is it important to use CoinJoin to break the links between a UTXOs past and present, it is also important to preserve your privacy with any future spending with coin control.
Use Coin Control
Coin control is an important privacy feature that lets you control which UTXOs you decide to spend when you create a transaction.
Coin control is especially important for using bitcoin anonymously after you have used CoinJoin because it is best practice to use the smallest number of UTXOs to send a transaction to prevent linking any of your Bitcoin addresses to each other in an address cluster.
If you ever receive any non-KYC bitcoin using the same wallet that you have KYC bitcoin in, then using coin control is incredibly important to ensure that you don’t mix the two of them together. If you do, the private sats will no longer be private because they have been merged with KYC sats.
Use Duress Wallets
A Duress wallet is any wallet that allows you to store more than one single wallet on a hardware device and uses a different passcode or pin code to access each one. The idea behind duress wallets is that if you are ever under duress, you can surrender one wallet and leave the other one protected. We are unsure of exactly how secure these types of wallets so we encourage you to spread your risk by not keeping all of your bitcoin on a single device.
Using a duress wallet can be a simple way to preserve privacy with bitcoin because someone might be over your shoulder looking when you enter your pin code on your hardware wallet.
Use Burner Wallets
Using burner wallets can be a useful tool to protect your privacy and use bitcoin anonymously. One of the nice things about generating your own seed phrases and building your own hardware wallet is that you can easily generate new wallets in a completely air-gapped in a secure offline environment. This makes it easy to generate new wallets that can easily be discarded as soon as you zero-out the balance.
Burner wallets are well suited for CoinJoin because the transaction history of an empty wallet can be used to de-anonymize the owner by looking at all of the transactions to see where bitcoin came from and where it was sent to.
For example, Let’s say that you buy or accept some non-KYC bitcoin via a PayNym, on-chain address, or lightning and you want to CoinJoin it to break the links between the coin’s past and future. The best way would be to generate a new burner wallet and send your non-KYC bitcoin to the burner wallet to CoinJoin. Once the UTXO has been CoinJoined enough and you decide to mix it to wallet that you will use to spend or HODL, you can destroy the burner wallet seed phrase as soon as the balance is zero. That leaves you with completely CoinJoined sats that can’t be linked to the original wallet that received them.
Using burner wallets in conjunction with PayNyms can be incredibly powerful so that when you CoinJoin, you don’t link your PayNym to the mix itself.
First, you simply receive bitcoin with your PayNym, then:
- Send the bitcoin to a burner wallet
- CoinJoin from the burner wallet
- Mix to your spend/hodl wallet
- Destroy the burner wallet once the burner wallet is completely empty
In the event that your wallet is ever compromised, they won’t be able to look back on the blockchain and see which addresses your bitcoin came from.
You can even use some specialized hardware wallets like that enable you to use bitcoin as anonymously as cash. Both SatsCard and Opendime are tools that are used to transfer bitcoin on a hardware wallet device without the need for an additional on-chain transaction or lightning payment.
Final Thoughts
Learning how to use bitcoin anonymously is not something that happens all at once. It takes time to fully understand the threats to your privacy and the tools that are available to protect you from those threats.
You can start to protect your privacy today by using Tor, a VPN, and a privacy-focused browser while you learn all about bitcoin. These require very little technical knowledge and will have a substantial increase in your privacy online.
Once you are ready, running your own Bitcoin node and connecting your wallet to that node are two of the most important steps to using bitcoin anonymously. I cannot stress this enough. The only Bitcoin node that your wallet should be communicating with is your own node.
After you’ve secured your wallet, accepting and buying bitcoin anonymously is the path toward slowly building a private and anonymous Bitcoin savings. The more people that do this, the more privacy we all have as a network and bitcoin becomes more useful as peer-to-peer electronic cash.
Finally, you need to practice good privacy when you use bitcoin. Using CoinJoin properly will make it impossible to know for sure which addresses belong to you. Once you are ready to spend some of your bitcoin, using all of the best post-mix tools like coin control, PayJoin, and burner wallets will ensure that you preserve your privacy when you spend bitcoin and grow bitcoin’s circular economy.
If you put all of these steps into practice, you will be part of an intolerant minority of Bitcoin plebs that are improving privacy for the entire network of Bitcoin users by using bitcoin as anonymously as possible.
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