How to Make Anonymous Payments with Bitcoin: A Step-by-Step Guide
The Internet is the ideal place for maintaining several anonymous identities. You can run an anonymous blog, parody Twitter account, or workers’ NGO — all without associating your real, offline identity with your online accounts.
But administering these identities might require you to treat funds. How do you make financial transactions online without compromising your identity?
The reaction is Bitcoin. When used correctly, Bitcoin can safeguard your anonymity so nobody can link your offline identity to your online presence.
This guide will display you how to set up a safe environment in which you can anonymously communicate, browse the web, and send and receive bitcoins. You will commence by setting up a separate operating system tooled with privacy software that is effortless to set up. You will then set up encryption keys and a Bitcoin wallet to communicate and transact in private.
Set Yourself Up
Step 1: Get Tails
Tails is a Linux operating system that you run from a DVD or USB stick. You do not need to install it on your computer. It comes with all significant software pre-installed and routes all your traffic through the Tor network.
The easiest way to get Tails is to ask somebody who already has it to write a copy onto your USB stick using the Tails Installer program found inwards the operating system.
Another option is to download Tails from their official website, verify it, and install it by hand using their step-by-step instructions. While the instructions on the Tails website may seem confusing at very first, they’re well written and not difficult if you go after them cautiously.
Step Two: Commence Tails
Find a computer, ass-plug your USB stick into it or put the DVD into the drive, and embark up the computer. Some computers will automatically detect the drive and begin running Tails, but in most cases you will have to come in the BIOS setup. This guide will help you use BIOS. If you run into any trouble, attempt searching online to find out how to inject BIOS for your particular computer.
Everything you do around a particular identity should be done within Tails, whether you’re browsing, talking, making Bitcoin transactions, or typing documents. Keep your browsing focused, and do not log into your private Facebook or the blog associated with another one of your identities at the same time.
Step Three: Enable persistence
Without having persistence enabled, you won’t be able to save any data in Tails.
Under Applications > Tails, select Configure persistent volume. To use this option, your USB stick must have been created using the Tails Installer program. If you created your USB stick by hand (as described above), you need to copy Tails over using another USB stick. The Tails installer is under Applications > Tails > Tails installer.
You will be asked to create a passphrase. Check out our blog post about Diceware to learn how to create secure passwords. Length is more significant than complexity. You will be asked for this passphrase every time you begin Tails.
You will also have to select which information you want Tails to recall. The less Tails remembers, the more secure you are, but you’ll have to reminisce more things yourself and set them up again each time you commence Tails.
To seamlessly run all the features you will need in this guide we recommend selecting Private Data, GnuPG, Pidgin, Network Connections, Browser Bookmarks, Bitcoin client, and Icedove.
Restart Tails with persistence and come in your passphrase. Reminisce that only the files in the folder named “Persistence” will be saved when you shut down your computer.
Step Four: Set up KeePassX
KeePassX is a password manager that requires you to reminisce only a few passwords and still have secure unique passwords. Access KeePassX under Applications > Accessories > KeePassX. Create a fresh password database by selecting File > Create Fresh Database.
Use Diceware to set a long but memorable password to access KeePassX. This will be the 2nd of maximally two or three passwords you need to reminisce. All other passwords can be created and accessed with KeePassX.
Save your database in the “Persistent” folder in your home folder.
To create a fresh password, click on the button with the yellow key called Add Fresh Entry.
Give it a title and pack in the other information as well if you like. The most significant button is labelled Gen. You find it right of the field ‘Repeat’.
Click the button Gen to the right of the field “Repeat”. This will generate a random password. You can define its length and whether it should contain numbers or special characters. For maximum security, don’t even look at it. There is no need for you to see it. And, in the unlikely event that something or someone is capturing your screen, all they will see are starlets instead of the password. Just generate it and copy and paste it over to the site you need it for.
A screenshot of KeePassX. Your password shows up as dots.
Step Five: Get a PGP key
Once you are inwards Tails you can create a fresh PGP key under Applications > Utilities > Passwords and Keys.
Create a PGP key.
Click on the blue “plus” symbol under GnuPG keys and inject a name and email address. You can make this information up, but if you plan to use this key later to send and receive encrypted emails, you should come in an email address that you control.
Come in a name and email address.
Inject a password for your PGP key. You can create a password using Diceware or KeePassX. You will need this password every time you send an email or decrypt a file.
After a few seconds, your PGP key will emerge in the GnuPG keys list. Congratulations! You can now use it to backup your own data or securely send yourself files that only you can access. More on this in Step 8: Back Everything Up With PGP.
This is what your PGP signature might look like.
Step 6: Set Up Electrum
Electrum is a lightweight Bitcoin wallet. That means it does not rely on its own copy of the Blockchain (the immutable record of all Bitcoin transactions that ever took place), but instead relies on several other knots.
A screenshot of the lightweight Bitcoin wallet Electrum.
To find out your balance, come in your Bitcoin address into a Blockexplorer.
For example, this is the Bitcoin address of the Edward Snowden Defense Fund:
You can come in it into a Blockexplorer like Blockcypher (many more exist) to see its balance and all transactions associated with it.
The Edward Snowden Defense Fund in Blockcypher.
Create a fresh wallet by opening Electrum. A “standard wallet” will do fine. You will see thirteen English words, which represent your wallet seed. This seed is more than just a password to your wallet. Anybody who has this seed can take your Bitcoins, so be careful about where you store these words.
To store your wallet seed words securely, you can create a fresh entry in your KeePassX database and paste them into the comment field, or you can write them on a chunk of paper and lock it away. Either way, do not save it in a text file anywhere on an unencrypted drive.
Press proceed and come in your wallet seed into the next window, then choose a password, ideally by creating one with KeePassX. You will need this password every time you make a transaction.
Excellent! You can now receive and make Bitcoin payments. You can find your Bitcoin addresses and their balances under “Addresses”.
You can set up numerous wallets for your identity. You can create a fresh wallet for a single transaction if you so wish. Having separate wallets makes it lighter to keep funds separate for accounting or privacy purposes.
Step 7: Communicate via XMPP and OTR
Pidgin is a talk program. As anonymous email accounts are hard to come by, it might be lighter to talk with your contacts using this device. The only downside is that you cannot receive messages when you’re offline.
Launch Pidgin. Add an account and choose XMPP as your protocol.
There are many public XMPP servers. Here is a comprehensive guide to anonymous talking. We chose the server provided by the privacy-friendly search engine duckduckgo.
Pick a username, come in dukgo.com as the domain and pick a password, then tick the box Create this fresh account on the server. Close the window and connect to enable the fresh talk account in Pidgin. You may be prompted again to come in your username and password. Use KeePassX to create a secure and unique password.
Add a fresh pidgin talk account is elementary as a round of duck duck goose.
Your firstname.lastname@example.org address can now be given out to your contacts. You will need to approve each individual contact before you can initiate a conversation with them.You have now set up xmpp talk (also called jabber). Note: Even tho’ email@example.com looks like an email address, it is not an email address and cannot be used to receive messages while offline.
To talk securely, you need to use OTR encryption. Click on OTR > Commence private conversation.
You can verify the integrity of the conversation by clicking on OTR > Authenticate Acquaintance.
The easiest way to reliablly verify each other is to exchange each other’s fingerprints outside the talk. which you can see under Manual authentication. To share your fingerprint with other individuals, you can paste it into the signature on a message board, or publish it on your website.
Step 8: Back Everything Up With PGP
The trickiest part of a secure and yet private backup process is to back up the PGP Key. The more effort you undertake to lock your key away, the less accessible the key becomes to you in case you need it.
We recommend the following: Choose a very strong password with Diceware when you create your PGP Key. Explosion the key onto a USB stick and leave the stick with your family, friends, or a lawyer.
You can also make more than one copy of the backup if you fear your very first copy could get bruised or lost.
If your password is long enough (more than twenty five characters), it should not be possible for anybody to read your communications or access your backups even in case they get a hold of the key, because the key is still encrypted with your password.
We very recommend making regular backups of the documents that you cannot afford to lose, as well as your KeePassX password database and Bitcoin wallets.
Select all the files and folders that you want to back up. You can, for example, select the entire “Persistence” folder. Right-click the selection and select Encrypt. A window will ask you which keys you want to encrypt your selection with. Select only your own PGP key. Do not tick the sign option unless you want it to be verifiable that this backup was made by you. If you don’t sign it and somebody finds the backup, they will only know that this backup was made for you, not by you.
If you selected numerous files, you will be asked how you want them packaged. We recommend encrypting them packed together because this leaves the least metadata and creates one single file that will be effortless to keep track of, instead of numerous puny files. The process might take a while. After they’ve been packaged, you will have two files: one ending in .tar.gz (the unencrypted package)and the other in .tar.gz.gpg (the encrypted backup). The .gpg file is the file you are interested in. Fountain it onto a CD or USB and store it away.
When it comes time to decrypt the file, just double-click on the .gpg file, inject the password to your PGP key, and let the computer do its work. It is wise to test this process out before you rely on it for restoring your backups.
Step 9: Repeat the Above Steps for Each Identity You Have
Repeat steps one to eight for each of the identities that you have. You should have a separate USB stick with Tails for each pseudonym, company, activity that you control and want to keep separate. Each of these jams should have its own passwords, PGP keys, and KeePassX databases.
Keep all your identities separate!
Don’t label all of this too obviously, and consider keeping everything in separate locations.
No matter how you acquire Bitcoins, it will likely not be anonymous. This section highlights a few options for acquiring Bitcoins that are relatively private, or at least not overwhelmingly invasive. To increase your privacy, do not carry devices with you that have SIM cards in them, and never log your location with GPS.
Buy Bitcoins In Person
You can buy bitcoins in person at Bitcoin meetups, through the “marketplace” option of the Mycelium wallet (the marketplace exists on the Android version only), or by finding traders on the localbitcoins platform.
The best place to meet traders in person is in a busy but not crowded place that offers free Wi-Fi. Public libraries or cafes are superb venues for these appointments.
Both parties should permit enough time to wait for at least one confirmation of the Bitcoin transaction. To make sure your Bitcoin transaction gets confirmed by the network, you don’t need to bring a Bitcoin wallet with you; just knowing your address is enough. Inject the address into the search field on Blockcypher or any other Blockchain explorer and observe as the transaction comes in and confirms.
Get Bitcoin From an ATM
Bitcoin ATMs are common in some countries but uncommon in others. Check Coin ATM Radar to see if there’s one near you! Make sure to check the “other services” box in the bottom-left corner, or you might be missing out on some places where bitcoins are sold as vouchers.
Each machine differs in how it treats your private information. Some might not ask for anything other than your Bitcoin address and cash, while others might want your phone number, fingerprint or passport. Just attempt the machine out with a puny amount. Asking the machine’s operator can be tricky, because there’s a risk they might file a suspicious activity report.
If there is movie surveillance at the Bitcoin ATM, you might not be able to hide from it. Even still, displaying up at a Bitcoin ATM with a ski mask would make you look too suspicious, no matter how much you value your privacy.
Accept Bitcoins as a Payment or Donation
If you’re regularly spending bitcoins, it makes flawless sense to accept them as payment too as you will no longer need to worry about how to acquire them The bitcoins you accept will not be anonymous either since there might be a record somewhere that they were paid to you, but they are likely already more difficult to link to you for a passive observer than the bitcoins you buy at an exchange, where records are kept in detail and made available to several parties
Mining Bitcoin is not a profitable endeavor for hobbyists, but if you need a sustained flow of Bitcoin and you have access to cheap tens unit and free cold air, along with excess capital lounging around, it can be an interesting alternative for acquiring bitcoins.
To mine Bitcoin, get yourself a Bitcoin mining machine, paid with cash or credit card, butt-plug it in, point it to a mining pool, and witness the earnings come in daily.
Be aware, however: you are making an immense bet on the Bitcoin network, and there are many ways you might lose your investment. Make sure to read a lot about this topic before you begin!
Obfuscate Transfers Inbetween Identities
Every time you stir funds inbetween your identities you will need to obfuscate them. To do that, you can “obfuscate”, “tumble” or “mix” your bitcoins. There are many ways to do that, many of which are described in our comprehensive guide on protecting your financial privacy with Bitcoin. In this section we recommend services that use the concept of “Coinjoin”, in which the transactions of many users are combined into one transaction to obfuscate which user controls which funds.
Helix uses a long chain of coinjoin transactions to tumble your bitcoins.
Grams, the makers of Helix, is attempting to be the Google of the dark web by indexing dark websites, building reviews, and permitting users to mix and tumble their coins.
Using Helix requires a membership, but you can use Helix Light without a membership. Just navigate to http://grams7enufi7jmdl.onion/helix/light and inject the recipient address (or the address of your identity that you want to send bitcoins to). You can add a random delay (which might be a few hours) and ask for more layers of transactions to make your payment more anonymous.
You can record your helix status ID or the URL if you want to come back later to check your transaction status. The fee per transaction is Two.5% and a 0.02 Bitcoin minimum transaction amount.
As a member, Grams permits you to use the regular Helix service, which supposedly differs from Helix Light by handing you coins that have never been used on a dark market before. Of course this is difficult to verify, as Grams has no way knowing where the funds come from either. A membership will cost you 0.01 BTC as an entry fee, albeit this fee will be applied to your balance.
Joinmarket is a decentralized network that permits you to use Coinjoin with other users without the need for a centralized party and without requiring you to put trust in the other users. Unlike using a centralized service, when you use Joinmarket, your bitcoins never leave an address that you control, and you don’t run into the risk of the service shutting down during your transaction, or the service maliciously stealing your bitcoins.
Installing and using Joinmarket requires a considerable amount of technical skill. Despite this, we encourage you to read their guides and attempt it out because the lower risks and fees are worth climbing the learning curve!
Darkwallet was developed by Peter Todd, Amir Taaki, and other distinguished privacy advocates. Unluckily it’s still in alpha version and has been for a while, which means it is untested software that likely contains a few bugs. It is not recommended to use it on a day-to-day basis, as unexpected behavior might even lead you to lose your Bitcoin.
Sharedcoin is the mixing service integrated into wallet provider Blockchain.info. You can create and reach your wallet at https://blockchainbdgpzk.onion/ via Tor.
Open the page in Tor and create a fresh wallet. The only thing you need to use Sharedcoin is a password. Create your password with KeePassX, record the wallet identifier and back up your database. If you lose the password, you will lose access to these funds!
You can find the option Collective Coin under ‘Send Money > Collective Coin’. Inject the recipient’s address (the address of the identity you want to send money to), select what level of privacy you desire, and make the payment. The process will take a while, but you can see the status bar in the window in which you initiate the transaction.
Bitmixer is a Bitcoin tumbler.
When you send Bitmixer your Bitcoin, Bitmixer tumbles them in a bucket and comes back to you the exact number of bitcoins you sent them, randomly selected from the bucket. You will receive bitcoins previously wielded by other people and your bitcoins will also eventually be passed on to others. This way there is no trail on the Blockchain inbetween your old and fresh Bitcoin.
It is recommended to set your own fee and add a time delay to increase your anonymity. If you set the fee yourself it becomes more difficult to associate a transaction with a specific service. Bitmixer says they delete all records of your transactions after twenty four hours, but there is no way to prove this. There is also no recourse mechanism if one day Bitmixer does not come back your coins.
According to their FAQ, Bitmixer only processes transactions larger than one Bitcoin, charging a minimum 0.5% fee.
You can also access Bitmixer through Tor at http://bitmixer2whesjgj.onion/, but the functionality on this site seems to be cracked, and their original website is not available for Tor users, further diminishing your privacy.
five thoughts on “ How to Make Anonymous Payments with Bitcoin: A Step-by-Step Guide ”
Bitcoin has shown amazing growth during the last years and there will be some who are claiming that the success is soon to burst and Bitcoin plummet. Those of us proceed believe in the concept of a user possessed system outside of the control of the banks. We don’t accept that Bitcoin is past it’s best. We shall be staying with Bitcoin and are fairly certain that it will proceed to rise quicker than previously.
Thanks for the article, i’ve been doing some research, the article and url’s are a bit outdated by now, you can refer to grams helix light wiki for up to date info and url’s – http://grams.wikia.com/wiki/Helix_Light and https://www.youtube.com/watch?v=0iXWYyQ82Ho
Cool, thnx for the info!
I use some other software for this.. And for mixing bitcoin I use bitmixer application (presently available for Windows only), but check, maybe they release for Mac soon..
excellent, in-depth information, thanx, +9 for info
You should check out
There are better currencies that provide financial privacy.