Let's say Bitcoin had these rules from the start:
- An address with balance cannot more receive money
- An address must use all its money in one transaction
This would prevent address re-use. To what extent would this make Bitcoin anonymous?
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This would not help, and would actually make things worse. Bitcoin transactions are public, the input and output addresses are known. This can therefore be traced. Simply tracking the transaction from an initial input (say, buying currency on an exchange that complies with Anti Money Laundering (AML) laws) through each of its single outputs to a destination address would de-anonymize any destination. Since addresses can't be re-used in this scheme mixer services (money laundering addresses) become impossible, so anonymity is impossible for anyone who uses an exchange compliant with AML laws.
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$\begingroup$ I clarified my question. A transaction can still have multiple outputs- but once an address has sent money it cannot send money again. So essentially any particular address can be an input once and an output once and that's it. $\endgroup$– LucienJul 6, 2020 at 15:32
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$\begingroup$ That would still prohibit mixer addresses. Since those are the only source of anonymity if using an exchange, this would hurt. $\endgroup$ Jul 6, 2020 at 15:46