Summary
- Ethereum transactions are traceable
- There is a way to send ETH anonymously
Update: Now that Tornado Cash’s source code has been made open source, this guide is working again! However, note that we don’t condone the use of these privacy-preserving mechanisms for malicious purposes. The original Tornado Cash was banned for a reason; criminals were using it too much. But we also believe that privacy is a fundamental right for people and that the tool shouldn’t be prohibited because of bad actors (who will find ways regardless).
Are Ethereum Transactions Traceable?
Yes, Ethereum transactions are traceable, but they are not that easy to trace.
Transactions in Ether are categorized as pseudo-anonymous since tracing the identity of an Ethereum wallet owner or receiver of funds requires extensive chain analysis and data mining.
The Ethereum blockchain is transparent, meaning its transaction data are accessible to the public. Anyone could easily use Etherscan to track the movement of funds as long as they know the wallet address or transaction ID.
However, information taken from blockchain explorers is not enough to link a wallet to its real-world user. But by careful chain analysis, one individual or organization can trace the origin of where the ETH was first purchased.
Since most Ether are bought on online exchanges and marketplaces via bank transfers or cards, a wallet holder’s identity could be revealed. And even if a user doesn’t use exchanges and buys all his ETH with cash, his IP address can still be traced.
There are other methods like social engineering and triangulation that help unveil a wallet owner’s identity if they fail to mask their IP address.
How To Send Ethereum Anonymously
If you want to send ETH anonymously, there are simple steps you can take even if you’re not the tech-savvy type. These are the steps:
- Use/Create a web3 wallet
- Mask your IP address
- Use Tornado Cash to send ETH anonymously
How to Set Up Metamask
Exchange wallets are obviously linked to your identity so you must not use them for anonymous transactions. What you need is a web3 wallet like MetaMask. Chances are that you already have one so you may skip ahead.
If not, go and download the MetaMask plugin for Chrome.
Click on ADD TO CHROME and confirm by clicking Add Extension. After the plugin is installed, the MetaMask logo will be displayed at the top-right of your Chrome browser.
Click on it and read the Privacy Notice if you want. As you can see, MetaMask says that “your current account is visible to every new site you visit.” This is why step two is important. Anyway, scroll down to click Accept once you’re done.
MetaMask will then prompt you to create a new password for your account. Be sure to use a strong password that you won’t forget.
Then, MetaMask will show your “Seed Words” recovery key. Secure this key as much as you can. It can be used to gain access to your wallet even if you forget the password or lose your device.
Once you have secured your seed words you should be ready to receive your first transactions.
Your MetaMask wallet should look something like this. Click on Deposit to top up your wallet with ETH.
How to Mask Your IP Address
This is the part where most people either skip or don’t know that it’s actually necessary. Using fancy mixing tools can only get you so far. Failure to hide your IP address will give you away if someone is serious enough to trace you.
There are a number of ways to mask your IP such as using:
- a VPN
- a proxy server
- Tor browser
I recommend using a VPN because it has better anonymization features. A VPN connection can route and anonymize all of your network traffic while a proxy server can merely redirect web requests.
The TOR browser offers the same (or better) anonymization capabilities as a VPN connection. However, it is quite slow and inconvenient for most users.
There are tons of VPN’s in the web but I’m used to PureVPN (affiliate link) so I recommend you use it. Simply install it on your browser the same way you did with MetaMask.
Once installed, click the PureVPN icon on the top-right section of your browser. You could sign up to a 7-days free trial.
I’ll leave the signup to you. Once done, log in your credentials and boom! Bob’s your uncle.
You can actually select which country to connect to. Once you’ve decided which country, click connect.
And that’s it! Your traffic is now being masked.
How to Use Tornado Cash to Send Ethereum Anonymously
Tornado Cash was banned in 2022, but the original creators made it open-source, and you can access the platform here. If that link doesn’t work, here’s an alternative: https://nova.tornadocash.eth.link/.
Now it’s time to finally send your anonymous transaction.
Choose ETH under the Token drop-down list and input the amount you want to deposit. In my case, I’ll just deposit the minimum 0.1 ETH.
You will then be prompted to backup your note. Be sure to copy it and store it somewhere safe first. Then click Send Deposit.
You will then be prompted on MetaMask to confirm. After you deposit, you could check if the transaction went through via etherscan.
That right there is your Ethereum balance locked in a contract. Now it’s time to send them to a newly-created wallet.
I recommend you use your MetaMask to generate a new wallet since you are using the browser extension VPN. If you want to use a mobile or desktop wallet be sure to install and use a VPN for your entire device whenever you send transactions.
Once you have your new wallet, click on Withdraw and input the Note you saved earlier and paste your new wallet address. Then, click withdraw.
You will then receive a confirmation that your ETH has been withdrawn. And that’s it!
You now have a fresh wallet that is not linked to your identity in any way. Enjoy your new-found anonymity.
The Takeaway
Ethereum transactions are traceable only if you allow it to be. Using Tornado Cash is one of the easiest ways to be able to send Ethereum anonymously.
Keeping your financial history private is your human right. No one should be able to stop you from doing it. With that being said, you must take responsibility for maintaining your anonymity.
Never forget to turn your VPN on whenever you send transactions from your anonymous address otherwise your efforts will go to waste.
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Now, let's delve into the key concepts discussed in the article you provided:
Ethereum Transactions Traceability:
Pseudo-Anonymity: Ethereum transactions are categorized as pseudo-anonymous. While the blockchain is transparent, identifying the owner of a wallet or the receiver of funds is challenging without extensive chain analysis and data mining.
Chain Analysis and Data Mining: Tracing the origin of ETH purchases involves chain analysis, which can reveal information about the first purchase point. This is often linked to online exchanges and marketplaces where identity disclosure is common.
IP Address Tracing: Even if users buy ETH with cash and avoid exchanges, their IP addresses can be traced. Social engineering and triangulation methods can further unveil a wallet owner's identity if their IP address is not adequately masked.
Sending Ethereum Anonymously:
Web3 Wallet (MetaMask): To send Ethereum anonymously, a web3 wallet like MetaMask is recommended. Users are guided to download the MetaMask plugin for Chrome, create a strong password, and secure the provided seed words for account recovery.
Masking IP Address: Anonymity is crucial, and the article suggests using a VPN (PureVPN is recommended) to mask the user's IP address, ensuring that their identity remains hidden during transactions.
Using Tornado Cash: Tornado Cash, despite being banned, became open source. Users can access it through the provided link and follow steps to send anonymous transactions. This involves choosing ETH, depositing a specified amount, confirming the transaction via MetaMask, and later withdrawing to a new wallet.
Summary and Takeaway:
Anonymity and Human Rights: The article emphasizes the importance of privacy as a fundamental right, defending the use of privacy-preserving mechanisms like Tornado Cash. It acknowledges the misuse by criminals but advocates for responsible use, promoting financial privacy as a human right.
Guidelines for Anonymity: The steps provided include setting up a web3 wallet, masking the IP address with a VPN, and utilizing Tornado Cash for anonymous transactions. The importance of maintaining anonymity, including consistently using a VPN, is highlighted throughout the guide.
This comprehensive overview not only demonstrates the traceability of Ethereum transactions but also provides practical steps for individuals to enhance their financial privacy on the blockchain.
