Originally Posted by
MeanPeopleSuck
Bitcoin was designed to be anonymous, but it didn't accomplish that.
First, lots exchanges and wallets demand personal data from their users and because every transaction is publicly available, when crypto's sent to or from a wallet with your name on it, your anonymity is threatened.
Second, the blockchain's transparency means a 'frequency analysis' can be performed on the web of addresses of a person's transactions, even if they've opened them anonymously. As soon as any transaction hits a wallet that's known or suspected to be controlled by a person, his anonymity's blown.
That's how the bitcoin community caught the Winklevoss twins in a lie. For years they went around saying they'd never sold a single bitcoin, that they only acquired them. And, sure, that was true for the 20 or so addresses they publicly disclosed as theirs. But what they didn't count on was a bunch of anarchist crypto nerds to trace and analyze every transaction connected to any address known or suspected to be theirs until they followed the trail to some pretty actively traded addresses, with plenty of BTC sales. Oops.