Why does Bitcoin not hide one's total wealth?
January 18, 2014 9:46 AM Subscribe
With little experience in bitcoins, I'm strongly convinced that any single person doing business with you can (with some work) figure out your potential wealth in bitcoin currency. Is this really the case?
posted by oxit to Technology (14 answers total) 3 users marked this as a favorite
If so, why does it seem none of the resources (bitcoin.org, Wikipedia, ...) are talking about it? Isn't this a major flaw in the system, rendering it unsuitable as a real life currency?
My thesis: a transaction is based on real life business, which usually identifies a buyer in some way. Say I'm paying my internet access with bitcoins to the provider. They then have one sending address, which is identified as me. From this address, they can then construct a graph based on the blockchain and find all my other addresses, thus being able to count (or at the least estimate) my wealth. This is possible because I have to transfer Fiat money to get bitcoins and regardless of how many transactions and addresses I use for that, there're always be enough trace to find "all" my plausible transactions and thus overall balance.
(I'm aware I can create a new address for every transaction, but I still need to either fund that address to be able to pay, or later use balance from this address to fund another address.)