In a recent study, conducted by the University of California
San Diego and George Mason University, it was concluded that there is a certain
amount of privacy
Bitcoins offer as long as you dont cash out or spend them. This really
comes in to play when you have fraudsters trying to illegally spend and launder
money. The researchers found that its harder to convert Bitcoins to cash and stay
anonymous due to Bitcoins blockchain.
In relation to tracking who is spending which coins, there
is a public ledger that records Bitcoin transactions. Bitcoin blockchain is the
public ledger that shows how coins move from one person to another. They are
represented by 34 character alphanumeric addresses. While these are numbers
without names, it still allows for some sort of tracking of users and
transactions.
Now, more and more companies and individuals want to know
whom they are dealing with when it comes to buying or selling virtual
currency. Using sophisticated fraud prevention
tools and systems is one good way to regulate transactions.
By using special algorithms, it is now possible to associate
large numbers of seemly anonymous Bitcoin addresses with certain major services
such as exchanges and payment processors. Through legal orders, deposits and
movement of the virtual currency can be traced back to the user allowing
investigators to reveal the people behind them. Fraud
prevention tools can assist in monitoring transactions, which make it
possible to diminish the anonymity of Bitcoin users.
[Contributed by EVS Marketing]
