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Pseudonym — What Does It Mean in Crypto?

Crypto Glossary by ChangeHero
Author: Catherine
Created:
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In crypto, pseudonymity is the practice of using an alternative, digital identity, such as a wallet address, instead of your real name to conduct transactions and participate in networks. While transactions are recorded publicly on the blockchain and are traceable, your real-world identity is not directly linked to these pseudonymous addresses, offering a level of privacy and security without being fully anonymous.

How it works

  • Cryptographic addresses: act as your digital pseudonym or alias.
  • When you create a crypto wallet, you get a unique address that identifies your wallet.
  • All transactions made from that wallet are linked to this address, creating a transparent but not fully identifiable history.

Key characteristics

  • Privacy: Users can interact with the network without revealing their real-world identity.
  • Traceability: Because transactions are public and linked to a consistent address, they are traceable on the blockchain.
  • Not Anonymity: Unlike full anonymity, where there's no link at all, pseudonymity allows for a consistent identity (the wallet address) to be associated with activities. If this address can be connected to a real-world identity (e.g., through an exchange account), the pseudonymity is broken.

Why it's important

  • Security: It protects individuals from cybercrime, harassment, and other potential threats by shielding their true identities.
  • Trust: It allows for participation and trust-building on the network without requiring users to disclose personal information, which is crucial for a decentralized system.

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  • crypto-glossary