Suppose my ISP is intercepting the bitcoin protocol communication. By analyzing traffic in the network, he could be able to determine that some transaction propagates from my IP (as there is no record of it in the rest of the network), and therefore that the computer issuing the transaction is (very likely) in my local network. Is that right?
1 Answer
That is right. If you want to obtain more anonymity you could install Tor and use the -tor command-line option when starting bitcoind to connect to the network through a (safe) Tor circuit. I believe this is discouraged however unless it is absolutely necessary, because Bitcoin will not automatically create a hidden service for node connection. This means that nodes can not connect to you, but you only to nodes and if everybody did this the network would not function. (could someone provide a source in a comment please? I'm pretty sure I read it but the link is dead).
Alternatively you could make use of the local library computer facilities, McDonald's WiFi (keep in mind that government authorities can request this data and that it WILL be given to them, make sure your laptop is anonymized as much as possible, with Tails for example) or establish an encrypted connection to a VPN.
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