Can private coin wallets be IP tracked?

Question

Say you have a private currency like Monero. You receive private coin in your wallet, an address on the blockchain basically.

Is there any way your computer can be tracked down? Like when you interact with the wallet e.g. to buy a product anonymously with your computer.

I suppose it all stands or falls with the crypto nodes.

Connecting to the node with your computer, network monitors see you connected to a private coin node. From there, I think net monitors are not supposed to be able to know which transaction was yours.

Could that pose a legal or financial problem some day?

Proceeding from there, VPN could hide that network traffic but then the VPN becomes the weakest link. They probably all cave under pressure from the government.

Perhaps it's worse. VPNs could be lying in their marketing while funneling everything to big tech AI data mining...

Tor also a good idea in principle, but I hear stories many nodes are compromised.

So is it even possible to do a crypto transfer completely anonymous, taking all technical and political factors into account?

Answer 1

When you send a transaction, your wallet is sending your transaction to your node (or someone else's if you're not running your own*), which then broadcasts it to other nodes on the Monero network. Someone monitoring the network can see the IP address of each node broadcasting a transaction but they do not know the sender, receiver or amount.

Dandelion++ helps to prevent a node determining which was the originating node (and thus IP) of a transaction broadcast. Tor / I2P / VPN help prevent knowing you even used Monero (transacted or otherwise). A VPN, as you noted, is not ideal because the VPN provider itself becomes a weak link (e.g. you have to trust they aren't logging).

*If you use a public remote node, they know they are the originating broadcast node and can tie that information to your IP address (i.e. "this IP address made a transaction at this time"), hence you really should use Tor / I2P if using a public remote node. Better still, run your own node.