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As privacy is part of security, I know there is a Bitcoin SE here but they couldn't answer my question so I hope it's appropriate to ask it here.

I don't ask about how to secure my wallet on my drive, but purely from a privacy and hence security standpoint on the network. For example I don't understand if I run through Bitcoin traffic through a VPN/proxy or TOR, will it add to my privacy or security? As the traffic will be more unique, obscured, not just like 'average" traffic on the net.

I couldn't really find more info on the topic. I just want that my wallet couldn't be associated with my person.

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Running any traffic through TOR, Proxy, or VPN would increase your privacy. There is nothing special about Bitcoin traffic. –  Ramhound Jan 16 '13 at 17:12
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It might do. Running traffic through tor helps to protect your privacy but there are quite some pitfalls.

Read the tor warning page for some basic ideas. In essence your biggest risks are:

  1. human error: eg. if you created this stackexchange account without tor, or you ever used it without tor, or in some other questions you reveal information about yourself -> in this case certain people/police might know that you have a milion dollar bitcoin wallet (or at least know/prove that you claim so) or you buy services that might lead to you using your wallet (this is probably the biggest risk because there are only so many useful things that are completely anonymous (you can't change to real money anonymously easily, you can't buy a car or a house or something that will be send to you by mail, etc).
  2. software bypassing tor: if your bitcoin client uses some sneaky way to obtain your real ip address and it communicates it over the net, tor won't help you
  3. software uses unencrypted data transfer. Note that tor exit nodes can read whatever is passing under their nose, unless you encrypt end to end, like ssh or https. They shouldn't be able to get your real ip address, but they can read and change content (say if your bitcoin client had a buffer overflow vulnerability, they could run arbitrary code on your computer) Note that running a tor exit node is quite easy for anyone to do, whereas the government might be able to spy your internet connection with help of your ISP, but for a random individual that is more difficult.
  4. time analysis: If you are a suspect and both your internet connection and that of the bitcoin service you use are under surveillance, a network packet of a specific size leaving from your computer and a packet of the same size arriving shortly after at the server, or the other way round might establish a suspicion that you are communicating with that service.

Note that their are services to help anonymize bitcoins.

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i actually think that It might do. Running traffic through tor helps to protect your privacy but there are quite some pitfalls.

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Pitfalls like what? Are there common issues to avoid? –  Bob Watson Feb 10 '13 at 10:57
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