How quickly things have changed. Until recently, cryptocurrencies were the go-to option for anyone looking to conduct untraceable financial transactions. Cryptocurrency trades are becoming among the most transparent and permanent in the world.

Blockchain's decentralised approach is what gives it its transparency. Transactions are dispersed and shared throughout a global network of linked computer nodes. DeFi is actually there for anyone to use and view. This is why so many people prefer it to traditional financial models.

Those wanting transactional privacy may find it difficult. The visibility of blockchain, on the other hand, allows authorities to deploy crime-fighting technologies to defend broader user security.

How Bitcoin protects the privacy of its users

While private and public keys protect user information, the blockchain's open nature makes it difficult to conceal transactions. No user can be completely anonymous with Bitcoin addresses recorded permanently on the network, for example.

Bitcoin addresses are used to direct the allocation and sending of bitcoins. Each user's wallet creates these in secret. Anyone, however, has access to any address's balance and transaction history.

Bitcoin recommends a number of steps to improve user privacy.

1.       To prevent accumulating a visible history, use a fresh Bitcoin address for each payment received.

2.       Use several wallets for different purposes to avoid having all of your transactions in one spot.

3.       Unless you're soliciting public donations, don't post your Bitcoin address on social media.

4.       To block third-party trackers, use a programme like Tor to disguise your computer's IP address.

An example of KYC requirements in action

The Qoin platform is gaining traction in Australia. Qoin tokens are used by participating merchants to buy and sell goods and services. The currency itself can also be traded.

The Qoin exchange complies with AUSTRAC's (the Australian government's financial intelligence agency) criteria. This means that all users who withdraw Qoin from the exchange are subject to Know Your Customer (KYC) requirements. To prevent criminal actions such as tax fraud and money laundering, individuals and corporations must verify their identities.

Customers' Qoin wallets are linked to bank accounts for withdrawal, which safeguards and monitors them. Banks must also record transactions worth more than $10,000 to AUSTRAC, as well as account holder information.

This is a far cry from the early, unregulated ‘cowboy' days of crypto, when some users believed blockchain would provide a handy way to avoid the law—and the tax man.

There's no longer any hope of anonymity or tax-free profits.

Those looking to hide their blockchain dealings for illegal purposes may be forced to look elsewhere as law enforcement tracking technologies become more targeted and powerful. There isn't anywhere to hide.