How to Keep your Identity Safe While Transacting Litecoin
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How to Keep your Identity Safe While Transacting Litecoin

Litecoin is a decentralized digital currency created in October 2011 by Charles Lee, a former Google engineer. The coin uses similar encryption techniques as bitcoin to create funds, transfer them, and to confirm transactions.

Litecoin is considered as the Silver to Bitcoin’s Gold with the main difference between the two is in the number of coins that can be created and the transaction speed. More coins can be created in Litecoin than in Bitcoin. Litecoin has also faster (2 to 5 minutes) transaction rates than Bitcoin’s (10 to 20 – 30 minutes or even more). 

Why Safeguard Identity?

A blockchain ledger is public. For many traders, this raises anonymity and privacy concerns. Many cryptocurrency traders like their transactions to be anonymous for several reasons including legal issues and most importantly to maintain privacy for safe transactions. Also, with increased anonymity, a trader is not limited to regulations that hinder cryptocurrency use.

Keeping your identity safe while transacting Litecoin can be hard given the network attacks that are designed to deanonymize users. However, there are several ways to maintain anonymity when transacting Litecoin. Below are some of the technological and behavioural means to do this.

Mixers and Tumblers

Mixers and Tumblers are used to confuse the trail of cryptocurrency transactions by breaking the link between coin addresses. This is achieved through the use of a temporary address or through coin swaps with other addresses of the same value. 

Tumblers are used to obfuscate the origin of funds for greater privacy. Muddled association between new addresses and user’s identity provides a new start to anonymity that makes it hard to trace the chain of the transaction. To gain more privacy, traders send coins to the mixer, which mixes them with coins in a pool before returning them to their respective owners at new addresses.

The two major types of Crypto Tumblers are centralized and decentralized mixers. While centralized mixers use a central entity to control the process, decentralized mixers achieve the goals without a central entity controlling the process. 

Crypto Mixer offers the most effective mixing services for Bitcoin, Litecoin, and Ethereum. The completely automated mixer neither stores the logs nor collects emails or personal data. Bitcoin Mixer charges a random commission of 2-4% for every transaction. 

Hide IP Addresses Using VPNs and Tors

Tor is an open-source software program that safeguards identity in online transactions through a technique known as onion routing. Onion routing is an encryption method that hides IP addresses in the application layer. The technique routes multiple times through layers over a virtual network making it difficult for anyone to decrypt the information.

A virtual private network (VPN) on the other hand uses secure protocols like PPTP and OpenVPN to guide online transactions. Litecoin investors can use a VPN and appear to work from London while in actual sense they are working from Hong Kong. VPN encrypts data from users to the VPN service and hides traffic from the user’s Internet Service Provider, thus preventing correlation-based traffic analysis attacks.

Both Tor and VPN can help safeguard the user’s identity by hiding their personal information as they make it possible to transact using a different IP address and geolocation.

Use New Addresses for Each Transaction

The immutable and transparent nature of blockchain technology makes it possible to trace transactions to their root. By using the same address for each transaction, it becomes easy to know the connection and track your wealth. Any third party can easily follow the flow of coins to and from the address. Your account security and privacy are compromised by address re-use.

By using new addresses for each transaction, however, anonymity is ensured so that finding the relationship between your transactions is made much difficult. Some crypto wallets provide a way in which users can generate new addresses each time they intend to send or receive a cryptocurrency. 

Using Stealth Addresses

A Stealth address can be used by anyone who wishes to request funds from the public while keeping his account details including the balance private. Instead of publishing your addresses on public spaces, the requester publishes stealth that can help in generating a regular address. Cryptographic functions are used to link generated stealth addresses to the requester’s private key without showing association in public. This prevents analysts from tracking funds ownership.  

Adopt Crypto Transaction Best Practices

Adopting online transaction best practices is a great way to ensure anonymity. Some of these practices include:

  • Choose the best exchange  – Some exchanges provide a great level of anonymity while others don’t. It is a best practice to always research exchanges before jumping in. 
  • Use Advanced Anti-malware programs – these protect your computer from both classified and unclassified online attacks. Ensure the auto-update option of your anti-malware is `on` or manually update it regularly.
  • Using a secure connection – a secure connection can be identified with any URL that begins with https://. URLs that begin with http:// should be avoided. 
  • Set a strong password – Avoid common passwords or passwords that can easily be guessed. A strong password is long and uses a combination of alphanumeric and special characters. Also, avoid sharing of passwords and PIN with anyone.

Buying and Selling Cryptocurrency in Cash

Some exchanges provide a way of Buying or selling cryptocurrencies in cash. This goes a long way in protecting your identity while transacting cryptocurrencies. For instance, Localcryptos integrates Escrow services and facilitates anonymous person-to-person transactions.  

Conclusion

Keeping your identity safe while making online transactions is a vital part of good online investment. It is not only beneficial but it is also what blockchain developers sort to address. While many cryptocurrencies such as bitcoin and Litecoin claim to be anonymous, it is possible to trace transactions to the inception in most of them. This exposes your transactions to hackers and other malicious attackers. Fortunately, Litecoin users can now protect their identity. The above measures if well implemented will help you maintain your anonymity while transacting Litecoin.

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.