Why is it impossible to get a straight answer as to whether Bitcoin is anonymous or not?

Question

Yesterday, I asked a question which got linked to this answer: Is it true that all the bitcoins in existence are on the blockchain (the ledge), but it just depends on who the owner (address) is?

Judging by that, if I interpret it correctly, there's no way to track people on the Bitcoin blockchain. Okay? So what's with the constant pointing out about how "Bitcoin is a fully open ledger blablabla not anonymous by design bladiblableblablu everyone knows exactly who does business with who forever etc."?

I swear, I've probably asked this and similar questions hundreds of individual times over the years, in chat rooms, on forums, on here, etc. I've watched endless videos and read mile-long articles on the subject, I've thought really long and hard about it, I've implemented a Bitcoin payment system on my own, I've use Bitcoin myself, etc.

I still truly have no idea if Bitcoin is anonymous or not.

The answer seems to be "kinda, but we don't wanna talk about it".

I see companies specializing in trying to determine Bitcoin ownership and who does business with what... Are those just fake? Complete BS? Are people just constantly spreading ill-intentioned FUD about Bitcoin? Is it actually anonymous after all? Is it safe for me to use the same wallet (with unique receive addresses) for my private use as my commercial project and not have them associated with me?

Is it possible to get a straight answer on this once and for all?

Answer 1

Why is it impossible to get a straight answer as to whether Bitcoin is anonymous or not?

Because privacy is not binary in nature. It is not as if there is some moment at which your information flips from being not-private, to private. Privacy exists on a spectrum, and as a bitcoin user, where you sit on that spectrum depends entirely on the actions you take.

This means that there are ways which bitcoin can be used which afford the user a very large degree of privacy, and there are always ways to use it which afford the user no privacy whatsoever.

Some things that the average user can do to help improve their privacy:

• Never give up personally identifying information to exchanges or other bitcoin businesses
• Never re-use bitcoin addresses to receive funds
• Run a full node to validate the network state themselves, run it over Tor only
• Only use wallets which connect to their own full node to query blockchain information
• Only use wallets which allow coin control and UTXO labelling
• Never look up addresses of interest on blockchain explorer websites (unless using Tor)
• Never publicly post any information that could tie them to certain addresses or transactions
• Use the lightning network to make payments
• Do not send round number amounts when making payments (eg send 0.00104103 BTC, instead of 0.001 BTC)
• Use privacy-focused wallet software, such as JoinMarket or Wasabi, to create coinjoin/payjoin/etc transactions .

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As a user, you need to decide what level of privacy you need/desire. Maybe following every point on the list above is too much for you, or maybe it isn't enough. There is no 'one size fits all' for privacy, though generally I would recommend endeavouring to retain your privacy whenever possible.

To quote this great article, which I would highly recommend reading:

As of 2019 most casual enthusiasts of bitcoin believe it is perfectly traceable; this is completely false. Around 2011 most casual enthusiasts believed it is totally private; which is also false. There is some nuance - in certain situations bitcoin can be very private. But it is not simple to understand, and it takes some time and reading.