So how does one properly transact anonymously, if everyone can track things in blockexplorer?
there is nothing in the block that specifically identifies you and you can use a different bitcoin address for every transaction.
Okay, but your client keeps a record of the addresses you have sent from? And your counter-party client keeps a record of addresses they've received at?
So to prove you transacted with said counter-party, authorities would need access to both to and from clients? (The wallet.dat x2?).