I personally believe everyone should have the ability to keep their life and what they do private, if they wish. With new folks coming into Ethereum and the crypto-verse daily, it’s important to breakdown how someone can truly remain private / anonymous if they value that.
It’s safe to assume that any wallet that you have funded with a centralized exchange (Coinbase, Gemini, Binance, etc.) - anything that asks for your name / social / ID / etc. can trace your identity to your Ethereum wallets that are off those exchanges.
As much as we’d all like to have boating accidents, the IRS and Uncle Same will probably see through it - and quite easily so - with Ethereum being a robust public immutable ledger and whatnot…
So it begs the question - How can we remain private / anonymous seeing that every gateway into crypto is through a centralized entity?
We’ll use a few tools to do so, and by the end, will end up with a wallet that is extremely challenging if not nearly impossible to trace back to your own identity. I will also break down some other alternatives that can work, and other processes that will work in the future.
- First, clear all browser & wallet applications.
- You’ll want to use a VPN. I personally use Proton VPN.
- Set your VPN on to mask your current IP address.
- Create a new wallet while you’re VPN is on, saving your address and seed phrase. We’ll call this Wallet 1.
- Disconnect from your VPN
- Open up your Public, KYC’d wallet that has your funds you’re going to be sending (this is the wallet that you sent Ethereum from Coinbase or any other exchange). We’re calling this your KYC Wallet.
- Send ETH to the wallet you created while on the VPN - Wallet 1 - this is meant to basically act as your KYC’d wallet sending money to some other stranger.
- Close out of your public wallet and browser.
- Turn your VPN back on to hide your IP, and ensure it’s set to the same location you used originally for Wallet 1.
- Sign in to Wallet 1 - you should see the ETH that you send earlier.
- Head over to Tornado Cash and deposit your funds into their protocol - for maximum privacy, you’d want to deposit in the smaller chunks, like 0.1 and 1 ETH, as there are more transactions going in and out there. Write down your secret notes for each deposit you do - don’t save those notes on your desktop or anywhere online, use a piece of paper - you’ll need those secret notes to withdraw your funds.
- Now, you want to wait - Tornado Cash increases your privacy the longer you can wait to withdraw funds, as more transactions occur in between your deposit and your withdrawal. Ideally, wait a few days or weeks, but it’s completely up to you.
- When you’re ready to withdraw, turn your VPN on and switch to a completely different one than your Wallet 1 VPN was using.
- Create a new ETH wallet on this new VPN IP address - calling this one our Anon Wallet.
- Withdraw your funds from Tornado Cash using your saved note(s) that you kept written down.
- If you did multiple deposits, you can even make multiple wallets for different withdrawals but this is optional.
- Now technically this new wallet or wallets are all anonymous and private - very very hard if not impossible to trace back to you. However - you can take it one step further.
- Switch VPN’s to a new IP that you will use whenever accessing your private wallet.
- Create a new wallet here, saving address and seed phrase.
- Switch back to your VPN IP for your Anon Wallet - and send your funds to this newer wallet you just made.
- Switch your VPN IP back to the set IP address you plan on using your anonymous wallet for, and you should see your funds there.
- Welcome to your completely anonymous wallet! 🎉🎉🎉
Other Potential Strategies:
- Using the Blank wallet once it’s deployed to Mainnet - it also uses Tornado Cash for privacy but it’s built in, essentially a MetaMask competitor.
- Using privacy focused Layer 2 solutions that will be coming out soon, like Aztec Network or Nightfall.
If you found this information helpful - consider joining the Plebs community discord and following me on Twitter: @Mona_La_Vinci