Bitcoin was created in the wake of the Global Financial Crisis. With financial systems in turmoil and trust in banks and regulators at an all-time low, many were drawn to the promise of an internationally viable currency free from centralized regulation. And while the global financial system has regained some stability, those features have only drawn increasingly more people to cryptocurrencies.
However, neither the privacy nor the international utility of cryptocurrencies are perfect. Blockchain technology effectively provides users with pseudonyms. If those pseudonyms can be attached to personal information, users and their transactions can be tracked.
Meanwhile, with interest in cryptocurrencies soaring along with their value, governments around have been increasingly vocal of regulation. These regulations may obstruct the otherwise open trading of cryptocurrencies around the world.
Using a virtual private network (VPN) makes for an improved experience in both regards: it provides for more extensive privacy protection and can circumvent many obstacles in freely accessing cryptocurrencies around the world.
Improving Blockchain Privacy
A VPN allows a computer to connect to a remote server through a tunnel that encrypts data at both ends. This protects all the information transmitted to and by that computer from being monitored by third parties. It also allows users to effectively conceal their IP address by taking on one provided by the VPN service. This makes it difficult to acquire any personal data that could be linked to records on the blockchain.
Paired with the partial anonymity of a blockchain, a VPN allows users a much higher level of security. This can be further strengthened by:
Using a different digital wallet for different payments or types of payments.
Encrypting your wallet, which makes accessing your transactions harder.
Keeping payment address private. If you transfer funds from a publicly visible address to any others, they’ll be linked by transaction history.
Bypassing GeoIP Bans
There have been movements in both China and South Korea to ban Bitcoin trading to some degree. Both of these countries are large markets for cryptocurrencies, so the consequences could be significant.
Cryptocurrency regulations can be enforced through geoIP bans, also called geo-blocking. This process restricts content based on the region associated with a user’s IP address.
When a user connects to a remote server via VPN, they essentially change their region to that associated with their new IP address. By selecting an IP address registered under a region that isn’t blocked, they can bypass geoIP bans.
While some sites use VPN detection software, this can be circumvented with a polyserver approach: for example, alternating between lower-profile VPN services or changing to different server IPs within the same provider. Cycling your IP address regularly helps bypass VPN detection.
While VPNs are a way around the inconsistencies of cryptocurrency regulation, it should be noted that the use of VPNs is illegal in some countries. Using them to bypass geo-blocking is especially contentious. Of course, if someone were trying to access blockchain opportunities in a region where they’re banned, they’re probably not too concerned with the legality of VPN use. However, if you’re using a VPN primarily for privacy, then it’s worth noting which countries allow for that option and which ones don’t.