5 Ways to Anonymize Bitcoin Payments

Bitcoin

Wired has collected five projects that deal with anonymous bitcoin-payments. Here are ways to safely and anonymously transfer the crypto currency to other recipients.

Since January, experts have been calling for toughening the fight against anonymous payments with the help of Bitcoin. And venture capitalist Mark Andressen, on the contrary, asserts that the full potential of the bitcoins will be revealed only if the restrictions on anonymous payments are lifted.
Some market participants and state regulators consider these start-ups a way of laundering dirty money. Others are a threat to the traditional services of Internet banking and electronic payments. While regulators, start-ups and financiers are trying to negotiate, five start-ups associated with anonymous payments are already offering their services to Bitcoin users.

Dark Wallet

The project of Cody Wilson and Amir Taaki, with the support of anarchists from unSystem, started last Thursday. Uses two methods to protect the identifiers of user wallets. When making a payment through Dark Wallet, the program combines data with simultaneous simultaneous transactions of two different users. It is impossible to recognize which transaction belongs to whom. The developers plan to unite three or more users into one transaction to make the protection even more reliable.

In addition to the above protection for senders, the project also provides protection for the recipients. These are stealth addresses that are sent to the recipient’s mail, and only after deciphering such a stealth address, you can access the code to enroll bitcoins on your wallet. In stealth addresses, chains of encrypted data are used that can not be directly associated with the sender.

Shared Coin

A service for making payments for up to 50 bitcoins using a similar DarkCoin protection scheme. However, here the encryption scheme is activated manually, by default it is disabled. Transaction logs on startup servers are not stored: short-term caching in memory is used for this. Here, for protection, data is mixed not with two, but with ten or more transactions.

In this service, you can also select the number of repeated transactions between dummy addresses before they reach the purse of the recipient. Each such re-translation costs 0.0005 bitcoins.

Darkcoin

The most secure way of transferring crypto currency between Internet users offers this startup. In fact, it is not Bitcoin, but an additional crypto currency, which has already issued an amount of 4.1 million units worth $ 1.40 per unit.

Uses the same algorithm and security mechanism with code called CoinJoin, as the previous two services. For additional protection, a network of distributed servers with a randomized activation mechanism is used. Some servers are used to generate a new crypto currency, and some are used to transfer payments between users of purses. The order and nature of the servers is random. Payout provides 10% of the new darks, which this crypto-currency system generates. The main developer of the startup lives in Arizona, his name is Evan Duffield, and he is 32.

Zerocoin

A startup based on a mathematical approach to encryption. Anonymization of payment transactions and encryption of chains is even stronger here than in all previous projects. In fact, it is another quasi-currency based on bitcoins that are converted into own, individual crypto money. The only information that can be documented during the transaction is the very fact that the transaction occurred.

Zerocoin originally worked as an addition to the bitcoins, but did not get enough popularity. To the level of Bitcoin this startup, of course, does not grow. But it allows you to exchange your own crypto currency for bitcoins and store money in a more secure form.

Integration with Tor

Services based on tracing by IP addresses are still relevant. The use of Tor as an additional tool for encryption of crypto-currencies and operations with them has already been introduced into Blockchain.info. Dark Wallet also plans to start integrating its wallets with Tor soon.

One of the key developers in the bitcoin payment system, Mike Hearn says he has already developed special software for integrating with Tor such popular digital bitcoin-wallets, like Hive, Multibit and Android Wallet. The program is based on bitcoinj and will represent an improved version of client encryption for operations with bitcoins. It is unlikely that it will be possible to protect the impenetrable for the National Security Agency, but it will be much more difficult to track and interrupt such transactions.

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