A Bitcoin holds a very simple data ledger file called a blockchain. Each blockchain is unique to each individual user and his/her personal bitcoin wallet.
All bitcoin transactions are logged and made available in a public ledger, helping ensure their authenticity and preventing fraud. This process helps to prevent transactions from being duplicated and people from copying bitcoins. The blockchain is a distributed database – to achieve independent verification of the chain of ownership of any and every bitcoin amount. While every Bitcoin records the digital address of every wallet it touches, the bitcoin system does NOT record the names of the individuals who own wallets.
So, although people cannot easily see your personal identity, they can see the history of your bitcoin wallet. This is a good thing, as a public history adds transparency and security, helps deter people from using bitcoins for dubious or illegal purposes.
To heighten financial privacy, a new bitcoin address can be generated for each transaction. For example, hierarchical deterministic wallets generate pseudorandom "rolling addresses" for every transaction from a single seed, while only requiring a single passphrase to be remembered to recover all corresponding private keys.
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