Is IP Address Associated with Transaction Data?

Bitcoin uses peer-2-peer connections to share the transaction database called the “Blockchain.”  When users connect via P2P the other nodes they are connected to have a record of the IP addresses they are connected to.

If you use a web wallet or software that connects to a web wallet then your IP address is not gathered by other peers on the network.  Only the web wallet has your IP address.

If you connect using Bitcoin-QT the other peers only know that you are broadcasting a transaction, they will not know if it originated from you or someone else.  There are no IP addresses in the Blockchain.

The confusion comes from the web site Blockchain.info.  They list a “Relayed by IP” address but that is just the first IP address they saw broadcast the transaction, not necessarily who originated the transaction.  It is easy to configure Bitcoin-QT to connect to peers that do not publish IP address information.

To see the details of how it works see http://cointext.com/bitcoin-and-ip-address-privacy/

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