Since you send bitcoin payments through one of the Bitcoin clients, I assume it
ID: 656295 • Letter: S
Question
Since you send bitcoin payments through one of the Bitcoin clients, I assume it announces the payment to the network, so each computer it connects to in order to do so would know the IP address from which you announce the payment.
So when you make a bitcoin payment, who gets your address IP, and also which of them will know you are the originator of the transaction message and thus the wallet owner, and not just re-broadcasting it?
Does the sellers themselves see your IP address, and can they be reasonably sure that they are seeing the IP address of the wallet's owner (and not somebody else)?
Explanation / Answer
From my basic understanding, since bitcoin network is peer to peer, you do not directly connect to your destination, but broadcast the message to your peers.
Because of this, those peers are the ones that see your true IP address (and most likely they are the only ones). Because of this, it might be possible to trace back the transaction to you, but no ordinary vendor would have the computing resources to do so. It would requure having access to peers, which would need to be quite targeted. Feasable, but most likely only governmental agencies would be able to pull it off.
If you worry about the anonymity of your bitcoin transactions, I suggest using TOR, or other anonymizing network, and tunneling wallet traffic over it. Note that all it would take is 1 screw up, so keep that wallet safe and never run it unless you are absolutely sure the connection is properly anonimized. Electrium(spelling?) bitcoin wallet supports socks proxies well.
Side note, vendors are not often interested in the IP address you paid from, as it is most often irrelevant. I would presume you would look at a web page that is a bitcoin payment request, and they would track the IP addresses visiting that page.