Protecting privacy and circumventing a geographic lock
Bitcoin was created at the time of the onset of the global financial crisis. At a time when financial systems were in turmoil, and the credibility of banks and regulators was at a record low, many were attracted by promises of a viable international currency free from centralized regulation. And although the global financial system has now restored some stability, such features only attract more people to crypto-currencies.
However, both the confidentiality and the international component of the cryptocurrency are not ideal.
Blockchain technology provides users with aliases. If these aliases can be tied to personal information, users and their transactions can be tracked.
Meanwhile, governments of different countries are increasingly advocating the regulation of digital currencies. These rules and laws may prevent the open trading of crypto-currencies around the world.
The use of a virtual private network (VPN) provides an improvement in both aspects: it provides greater privacy protection and can provide easy access to crypto-currencies around the world, despite the limitations.
Improving the privacy of the VPN lock allows the device to connect to the remote server through a tunnel that encrypts data from both ends. This protects all information transferred to both this device and this device from third-party control. It also allows users to effectively hide their IP address using the address provided by the VPN service. This makes it difficult to obtain any personal data that may be associated with the data in the blockchain.
Along with the partial anonymity of the blockchain, VPN allows users to significantly increase their level of security. It can be further strengthened in such ways as:
Use of different digital wallets for different payments or their types.
Encrypt your wallet, which will make it difficult to access your transactions.
Use private billing address. If you transfer funds from a publicly visible address to another, they will be linked by a transaction history.
Bypassing geographical prohibitions
In China and South Korea, there have been moves to ban or restrict trade in bitcoins. Both these countries are large crypto-currency markets, so the consequences can be quite significant.
Laws on crypto-currencies can be enforced through geographic prohibitions (geoIP), also called geo-locks. This mechanism restricts content based on the region associated with the user’s IP address. When a user connects to a remote server through a VPN, they essentially change their region to the one where their new IP address is located.
Choosing an IP address registered in a region where access to the desired content is not prohibited, users can bypass the prohibitions of geo-locking.
Although some sites use software to detect virtual private networks, this can be circumvented using a poll server approach: for example, by alternating VPN services or using different IP addresses of a server from the same provider.
Regular changes to your IP address help circumvent VPN discovery.
While virtual private networks are a way of bypassing crypto-currency regulation, it should be noted that the use of VPN in some countries is illegal. This makes circumvention of geo-blocking with the help of such services especially controversial.
Of course, if someone tries to access something in a region where it is prohibited, they are probably not too concerned about the legitimacy of using a VPN. However, if you use virtual private networks primarily for your privacy, it is worth noting for yourself which countries allow this service and which ones do not.