Cryptobanknotes Offer the Privacy Lost by the Blockchain
There are no completely anonymous activities on the internet. Any action on the internet leaves specific traces.
There is not a single cryptocurrency with transactions that remain entirely anonymous. The blockchain holds a record of all transactions of any cryptocurrency. These are also available for viewing.
All e-wallets have their own public address. Each person’s name is not directly linked to their e-wallet.
However, by tracking the public addresses of e-wallets in a particular transaction, it is always possible to determine the owner of the e-wallet at the very moment the money is withdrawn.
It doesn’t matter if they passed the Know-Your-Customer (KYC) procedure or used the anonymous TOR network to transfer cryptocurrency exclusively from a mining pool like Eligius. There are special tools that help track electronic transactions after the “meat grinder.”
This will take more time. However, it will almost always provide a positive result. Moreover, the name of the attacker will be found, and their IP, meaning their physical location will be known as well.
Therefore, the level of cryptocurrency encryption is entirely unimportant. Traces will exist. They will be outside the cryptocurrency ecosystem. Cybersecurity trackers know all about these various traces.
It is through these traces that those participating in illegal activity can be tracked down. Whole special services departments work on the darknet to find these bad actors.
Cryptobanknotes and privacy
In a sense, the introduction of cryptobanknotes even scares me a little. Cryptobanknotes provide complete anonymity of financial transactions in cryptocurrency, the same anonymity that fiat banknotes have now.
Moreover, cryptobanknotes turn the use of any, even the most open cryptocurrency, into a completely anonymous process. This is the specificity of this financial instrument. It is the magical element of the alchemist that turns everything he touches into gold.
This will greatly simplify the life of CBDC developers and leave a certain amount of anonymity to ordinary citizens who do not commit any crimes but simply do not like publicity.
Furthermore, trading cryptobanknotes on the internet leaves no trace at all. The amount of cryptocurrency equal to the face value of the cryptobanknote always remains untouched in the cryptobanknote’s own e-wallet.
There is no access to the e-wallet. Payments happen by cryptobanknote. Cryptobanknote passes from one hand to another. This process can continue indefinitely until the cryptobanknote becomes dilapidated and withdrawn from circulation or until an electronic payment is made from this cryptobanknote.
Only at the moment of making an electronic payment on the internet will electronic traces appear. The rest of the life of a cryptobanknote is completely anonymous, just like the life of a regular fiat banknote.
Notes versus bills
With this in mind, Cryptonotes and Cryptobills will differ in terms of the length of anonymous use. Alongside the degree of anonymity due to the presence or absence of access to their own e-wallet.
Cryptobills that do not have full access to their own e-wallet and cannot make electronic transactions will be completely anonymous throughout their long life. They will also have a significantly higher degree of anonymity compared to Cryptonotes.
In turn, smartphones, plastic cards, hardware wallets, NFC devices, and hybrid banknotes with chips will not provide anonymity to the user at all.
As a result, there needs to be a connection to the blockchain registry every time. This includes checking the availability of funds and conducting e-transfers. This, as we know, will leave a lot of traces on the internet.
This kind of anonymity is only provided in the digital financial world by cryptobanknotes—full anonymity of transactions with the complete impossibility of any censorship.
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