Amazon has recently acquired a patent that reportedly could unmask the users transacting with Bitcoin. This is accomplished by data-sets to establish the active participants. If this becomes a reality, then there won’t be any anonymity in Bitcoin. We’ll take a detailed look at this patent and how it could affect Bitcoin users.

Bitcoin’s Main Use-case

Bitcoin’s main use case is anonymity. Many people have interest in this currency due to the fact that the transactions can be secure and private. The sender and the receiver’s name and other details are not known. The public ledger will contain only the transaction details and the public addresses of the sender and the receiver. There are many privacy coins in existence lately that offer more privacy features than Bitcoin, but still, when compared to traditional financial systems like banks, Bitcoin is far more anonymous in nature.

Privacy is a Challenge to Government

The privacy feature in Bitcoin and other cryptocurrencies are a challenge to the government in controlling money laundering and other criminal activities. Some organized crime gangs hide behind the anonymity and perform illegal activities. They cannot be traced that easily, so Bitcoin was proving to be the currency that gives complete privacy before other privacy coins arrived.

Amazon’s Patent to Unmask Bitcoin

This patent was originally filed in 2014 by Amazon and recently was awarded. The patent will help Amazon to partner with other global retailers and telecommunication companies to distinctively map bitcoin transactions with the IP addresses and shipping addresses. The patent also suggests that the collected “Datasets” can later be used by the government for law enforcement and collection of taxes.

The government agencies would show interest in subscribing to the “data stream” and this will make their job easier. They would be able to see the global Bitcoin transaction tagged with ISP data to determine the source IP addresses and shipping addresses.

NSA Also Wants to Monitor Bitcoin Users

NSA is also reportedly trying to come up with a mechanism to identify the bitcoin users. Amazon might help them using this patent. But in the past, we have seen that the IP address alone are not sufficient enough to convict a suspect in court. The suspect can also use a VPN connection to hide while transacting with Bitcoin that could straight away nullify Amazon’s patent.

Amazon with this patent is helping catch people hiding behind Bitcoin so that governments can tax them. But, we need to also note that Amazon also does not pay taxes properly and one needs to check on how much tax they pay globally. Since they are a global entity, it is easy for them to avoid tax by showing some other geographic location as their base address where there is less or no tax.

This patent, if it is put to use, could move away Bitcoin users to more privacy-oriented coins like Monero, Dash, Zcash or other privacy coins. These coins not only hide the transactions from displaying in the public ledger but also hide the IP address of the source and destination addresses. This patent is of no use for Privacy focused coins.

We will wait and watch how Amazon is going to use this patent. Will this affect the Bitcoin users in doing a private transaction? This is a question that will remain until this patent is put to use to map the Bitcoin transaction with the IP addresses.