When it comes to protecting your privacy, the story is similar.
There are ways to protect your privacy when using bitcoin to
move funds around, but these require some effort and planning:
Generating a new wallet:
When receiving funds from another user, you can opt to give them
a brand new, freshly generated wallet address, which cannot be
directly linked to any existing addresses you already own. This
type of throwaway address lets users isolate transactions from one
another, which is the primary precaution you can take to protect
your privacy.
However, depending on how you store your funds — which type
of bitcoin client you are using and which operating system you’re
using it on — you may also be able to generate change addresses.
For example, if you install the Bitcoin Core client on your computer
or laptop, you can create a new change address every time
you send funds to someone else.
A change address occurs whenever you have a certain amount of
bitcoin in your wallet balance and are sending less than that total
amount to another user. Let’s say you have 3 bitcoin and need to
spend 0.25 bitcoin. You need to receive the “change” — 2.75 bitcoin
in this case — in your wallet. The Bitcoin Core client (as well
as a few other desktop clients) allows you to have this “change”
sent to a newly generated address. In doing so, there is no direct
link between your original address and the new address, even
though you can trace back the steps by looking at the blockchain
itself.
Keeping your wallet address secret:
Another way to protect your privacy — to a certain extent — is
by not posting your public bitcoin wallet address in a public
place. Using the address on your website, blog, social media, or
on a forum is not a good idea if you want privacy. Once someone
stumbles across your wallet address and can somehow tie it to you
personally, there is no way to restore privacy other than by using
one of the aforementioned methods.
