Anonymity is the core feature of blockchain technology, ensuring that all participants in its network remain unidentifiable and can continue their operations privately.
How Does it Work?
Anonymity in Bitcoin is ensured by
- Trustless Operations, where no one needs to identify each other because trust is established through code.
- Making the chain permissionless so people can easily join and switch between accounts when they are identified.
- Helping miners stay hidden as long as they want to prevent censorship.
Why was Bitcoin Made Anonymous?
Satoshi Nakamoto ensured that Bitcoin remained anonymous to prevent compromise, ensure greater adoption with complete privacy, and make it beyond the government’s ability to identify its members and prosecute them.
Security
Bitcoin’s security depends on its nodes. Anonymity helps these nodes run privately without any outside interference. Even if a node is identified, they would need to switch to another computer to rerun it.
Pirvacy
Bitcoin was envisioned to be the wealth of the digital world. Any public information on its holders would have highlighted them, putting them at risk. Further, it would have thrown the risk of unwanted attention, preventing greater adoption of the cryptocurrency.
Censorship Resistance
During the initial years of Bitcoin, almost all governments tried to ban or suppress it. An anonymous network prevented the government from identifying its users or penalizing them. Anonymity saved Bitcoin from undue action at that level, so that, despite a ban on Bitcoin mining in China, the country still ranks among the top 5 countries by hashing power.
