We all know that most of the illegal transactions take place through bitcoins as it cannot be tracked.
But I read in some websites that many intelligence agencies have started to find a method and have had significant progress.
Is it true?would our trading be at risk as many of us earn a lot and don't pay any tax to the government.
It is only true if you don't know how to use your bitcoin anonymously. Bitcoin can be tracked if you know who owns the bitcoin address because you can see where the coins are sent and where the coins are cashed out into fiat. Usually cashing out to fiat is where people get caught. However, if you use bitcoin mixers where your coins will be spread across different addresses, you can add a layer of anonymity and safely cash out without knowing where your coins came from.
By using bitcoin mixer would it take more transaction fee?is there any VPN type service which can hide or show a wrong bitcoin adress?
and thanks for your suggestion .
1) yes, some mixers don't charge a mixing fee, however, they're businesses so they have to make money (wich means that even 0% fee mixers will have a way to make you pay a small amount of money), and you'll always have to pay for the miner's fee of the transaction depositing the funds, and probably also for the transaction from the mixer's wallet to yours (i don't think the mixer will ever pay your transaction fee)
2) you can use a VPN if you want, but "hiding or showing a wrong bitcoin adress" is not really to the point. If you use an spv wallet, you have to send a request for fetching the unspent outputs for your address, there is no way around it... If you run a full client, you download the blockchain and broadcast signed transactions, but you don't usually send out your address...
There are no ip's recorded in the blockchain, and your peers can, theoretically, save the ip of the node sending them a block or a transaction, but they will never know if that ip is the creator of the block/transaction, or merely somebody that is just broadcasting a block/transaction they received from an other node... So there is little use in saving ip's unless you have a whole network of nodes and you can start running statistics on all of your nodes.
