Re: How can a goverment trace you have BTC?

How can the government discover I own BTC, let's say I'm from Venezuela where crypto is banned, what they can do to discover and arrest me?

Government can trace your bitcoin if you had submitted your personal details to the government and stating that you owned bitcoin. With that declaration the government may impose taxes for every transactions that we are about to make.

I think government can't trace you, because it is a digital currency. That's why many bad people used in eligal transaction, it is an anonymous.

It is difficult to trace that you have a bitcoin. Unless government can discover or make a machine than can detect bitcoin or bitcoin detector.

Your transactions are only "anonymous" when you're using dummy bitcoin addresses. But at the end of the day, you're going to put your bitcoins in your local exchange account in order to cash out your bitcoins. This is the time that you're no longer anonymous and it's the time that the government has learned that you have bitcoins. This is why you're not really "anonymous" in the bitcoin world unless you do extra steps to do so. No matter how many times you put your bitcoins in a mixer, you're still going to need a local exchange site to cash out your bitcoins. And for all I know, local exchange sites need to have a license and all. Basically the government can access their records if they wanted to. They never promised that you're going to be anonymous with them, did they?

This is why bitcoin isn't exactly "decentralized" unless these companies are gone. We are in need of them, at the moment.

For us to be actually "anonymous", there are only two ways. One is to have a new website where people just do P2P transactions that has a large community and scams are being moderated. Second, commodities are finally being sold in exchange of bitcoins so you don't have to exchange your bitcoins into fiat before you can use it.