Pseudonymity describes shielding your true identity from the public and instead using a fake name or made-up identity.

It isn’t the name of a famous dinosaur!

It actually refers to one of the foundational aspects behind most public blockchains, that being blockchain security.

In blockchain security, the pseudonymous nature of certain blockchains keeps a network user’s identity hidden from other network users while still linking all of the transactions made by that person to a pseudonymous identity that CAN be tracked by almost anyone.

Pseudonymity is a welcome function of blockchains, as it aids in personal privacy and security while transacting on public blockchains.

Anonymity, on the other hand, prevents transactions and network activity from being linked to anyone.  If you are anonymous, your true identity is completely hidden and unknown.

Satoshi Nakamoto is a perfect example of pseudonymity in crypto.  Satoshi Nakamoto is the inventor behind Bitcoin, but we don’t know his real name or true identity.

The varying options of user privacy are what many in the crypto industry come to believe as one of the main reasons why cryptocurrencies appeal to so many people.

Users are shielded from having to share personal details with a company or government and can still transact money across borders with anyone, anywhere.

However, that same focus on user and transaction privacy in crypto has become an area of debate in an industry battling illicit activity, con men, and just bad people hoping to hide in the shadows.

The pseudonymous and anonymous nature of cryptocurrencies has resulted in governments and institutions forcing regulations on popular crypto businesses, regulations that eventually trickle down to the user.

Financial regulations in the form of KYC and AML checks are becoming more and more common across cryptocurrency exchanges and other crypto apps and services, taking away the ability to stay private on mainstream services.

Centralized crypto exchanges have become the primary onramps for people moving money into the crypto markets, so it’s easy to understand why regulators are focusing their time and energy on those types of organizations.  Decentralized crypto exchanges hope to appeal to a wider audience by offering trading accounts that only need the user to connect their crypto wallet to the exchange to gain access to the exchange’s services.  KYC information is not required.