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If I have 0.01 on an exchange that allows generating new addresses , and I send 0.02 to a new address on that exchange , and then I send 0.025 off of that exchange , did I basically cross spend and the new address with 0.005, and the other 2 addresses , are now all traceable to be connected to each other? To my understanding because transactions have many digits, they can be used to map the addresses (.010122+.024991=...do math with mining fees..==> ok these 3 are making this transaction)

For complete privacy and annonymity would I need to first empty out the account first ? I would end up with a lot of dust.

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Exchange services will generally consolidate customer deposits, and allow withdrawals from a communal hot-wallet. So the coins you receive upon withdrawal may have very little on-chain relation to the coins you deposited. The specifics of this will vary from one exchange to another though.

For complete privacy and anonymity would I need to first empty out the account first ? I would end up with a lot of dust.

Bitcoin can be used privately, but it takes some work. Emptying out your account won't do much, and if you're looking for privacy, then you shouldn't be transacting through a trusted third party anyways.

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  • If I take out that it was on an exchange , and say I do this on Electrum , are the 2 original addresses and 1 address with the remaining amount traceable to each other ? Apr 19 at 0:42
  • Yes, but not because of the output's values as your question suggested, it would simply be because all the inputs/outputs in question were party to the same transaction. See for example: en.bitcoin.it/wiki/Privacy#Common-input-ownership_heuristic
    – chytrik
    Apr 19 at 4:10

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