The fact that federal authorities managed to pinpoint a scheme by James Zhong does not necessarily compromise Bitcoin’s anonymity. It is a long-standing pet peeve of those in the industry that the general public falsely believes that the Bitcoin network is anonymous. Crypto enthusiasts are keen that the idea of Bitcoin being anonymous has long been disproven.
Bitcoin’s Anonymity Cracked?
Rather, Bitcoin is pseudonymous and does not offer full privacy, like that offered by privacy coins like Monero. Bitcoin is, in fact, traceable, though admittedly, it takes a little effort to identify someone. The growth of the market is making it easier. The arrival of more sophisticated tools and processes is also contributing to this trend.
Zhong executed the theft when he was a 22-year-old student, finding a loophole on the defunct dark web Silk Road. He frequently moved the funds through multiple accounts over eight years to hide his tracks but was eventually discovered.
The idea that there are digital breadcrumbs that can be traced has always existed in the market. Bitcoin was never anonymous in the first place. The only difference is that it is now easier to do so, especially with what companies like Chainalysis have to offer.
Bitcoin is Pseudonymous, Not Anonymous
Bitcoin is pseudonymous, a term that crypto proponents are keen to emphasize. Wallet addresses are simply pseudonyms for the holder, and these addresses can be tagged as suspicious or whatever else. It is possible to trace someone’s identity through this.
However, there are still ways to overcome this pseudonymity, namely by using Bitcoin mixers. The U.S. government is aware of this and has worked to shut down cryptocurrency mixers.
Blockchains, in fact, serve as the perfect place to store evidence. Information stored on the ledger is immutable and can be traced back to its very origin.
Other Media Outlets Also Criticized
The report comes not long after the New York Times published a report on the energy consumption of the Bitcoin mining industry. The report estimated the emissions and energy usage, but industry insiders were unhappy with the methodology.
As such, many in the crypto community still take issue with how mainstream media study and report on the crypto asset class. This is a tale that has been going on for years, and the crypto community is keen that mainstream outlets understand the technology better.
U.S. Attorney Announces Historic $3.36 Billion Cryptocurrency Seizure And Conviction In Connection With Silk Road Dark Web Fraud
In November 2021, law enforcement seized over 50,676 Bitcoin hidden in devices in James Zhong’s home. Zhong has now pled guilty to unlawfully obtaining that Bitcoin