alt Hacker NewsThe anonymity aspect of it always confused me. If anything, bitcoin and almost all other cryptos are the ultimate surveillance state currency. Every single bitcoin, no matter how many fractions it is broken into, is traceable through every single transaction it has ever participated in, all the way back to when the coin was first mined.
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It isn't anonymous. Anybody who says bitcoin is anonymous either doesn't understand bitcoin or doesn't understand anonymity. It's pseudonymous.
That visibility could be considered a feature for some use cases. We could use more transparency in many areas, particularly government.
When you start transacting on Bitcoin Lightning network (which is essentially sending pre-signed bitcoin transactions in a smart way, without submitting them on the main chain), then you no longer see each transaction. Lightning introduces decent privacy, not perfect, but decent.
Technically there is no such thing as a bitcoin. Just unspent transaction outputs. Those get spent as an input of a transaction and then are gone forever. There is no concept of the output of a transaction being the same "bitcoin" as what comes from the input of the transaction. This means if you had 2 inputs and 2 outputs of the same amount there is no way to trace which input became which output. At best you can find which outputs potentially came from an input.
But you (theoretically) cannot know who mined the coin, or who is actually the holder of the coin, thus the anonymity. Though currently this is getting restricted as governments require more ID verification from businesses dealing with crypto, which links up your coin to a real person.
You are confusing anonymity and privacy. Bitcoin can be anonymous, but not private.
Early on bitcoin was thought to be pseudoanonymous. Like sure, it's all public, but what's public is "bc1qxy2kgdygjrsqtzq2n0yrf2493p83kkfjhx0wlh", not "John Smith, age 43, living in Florida".
Then two things happened: people figured out that it's actually very easy to connect the dots, particularly if somebody ever does something like: "donate here: (hash)".
And, Bitcoin is hard to get into. As soon as difficulty went up, making yourself some went out of the window. Now you have to buy it. And its characteristics mean that anyone selling any online wants to be really, really sure of your identity. Thus near everyone ends up creating accounts at Coinbase or wherever with very accurate identity verification, and now we've got real names connected to those random looking numbers.