"Privacy is not secrecy," wrote Eric Hughes in 1993. Privacy means choosing what you reveal and to whom. Your payments reveal where you live, your health, your politics and your friends.
The problem
Cash was private, but card and bank payments are recorded by companies. Hughes argued that "privacy in an open society requires anonymous transaction systems."
What Bitcoin offers
No account, name or ID is needed to create a wallet or receive bitcoin. Bitcoin uses pseudonymity: addresses are random-looking strings, not names.
What it does not hide
Every transaction is public on the blockchain, forever. If one address is linked to you, for example when you buy on an exchange that does kyc, others can follow the money from there.
Good habits
- Use a new receiving address for each payment. Most wallets do this automatically, and the white paper recommends it.
- Run your own node so you do not reveal your addresses to someone else's server.
- Be aware that exchanges and many services keep records.
Takeaway
Bitcoin gives you money that does not require permission or an account. Privacy is possible but not automatic: it depends on how you use it.