As individuals, it’s important to take steps to protect our personal information online so that it doesn’t fall into the hands of malicious actors. Databases can be hacked in various ways, but the most common one is guessing or brute-forcing passwords. Appropriation of identity, credit card cloning, and stolen bank information are just some of the risks we come across. When you own a digital asset like Bitcoin, you risk compromising your wealth. KYC (Know Your Customer) is now mandatory for most cryptocurrency exchanges, so you must provide your personal details if you want to buy Bitcoin online.
Unless you make a concerted effort, you have no privacy or anonymity online. Still, it’s not the most straightforward process. If you want to buy Bitcoin and remain completely anonymous, here’s how to get around the rules.
What Is the Purpose of KYC Compliance?
As discussed earlier, KYC stands for Know Your Customer. It’s a mandatory process for financial and non-financial organizations to verify the identity of customers when opening an account. Simply put, a cryptocurrency exchange must ensure you’re who you claim to be. In an effort to comply with AML (Anti Money Laundering) measures, many platforms have implemented KYC and, therefore, require information such as name, date of birth, and address, among other things. The aim is to stop illicit funds from penetrating the legitimate financial system. You may be required to submit additional documentation to verify your identity.
There are some cryptocurrency exchanges that don’t require identity verification, but there are risks associated with using such platforms. More exactly, they’re vulnerable to hacks or fraud. Non-KYC exchanges typically have lower liquidity because they’re smaller and serve a smaller customer base, so it can be challenging to find buyers or sellers. The goal of KYC and AML conventions is to put an end to financial crimes, although they leave buyers vulnerable. Getting back on topic, it’s possible to trade Bitcoin anonymously, but it’s not highly recommended.
Bitcoin Transactions Aren’t Anonymous, Just So You Know
Bitcoin is widely believed to be anonymous, untraceable, and tamper-proof. The truth is that Bitcoin is pseudo-anonymous, which means that it can be traced using the wallet address, transaction history, or the blockchain. The blockchain is an open ledger, so the transactions are recorded for anyone to see. The Bitcoin blockchain doesn’t feature data such as name and address, but some companies are running nodes in an attempt to identify data such as your IP address. If you want to use Bitcoin to purchase goods and services, you must exchange the cryptocurrency into dollars to actually spend it.
How To Buy Bitcoin Anonymously (And at The Same Time Legally)
If you want to keep your identity secret while buying Bitcoin, try one of these methods:
Buy Bitcoin Through a P2P Marketplace
A P2P (peer-to-peer) marketplace is a platform that allows you to trade cryptocurrency directly with another person. In other words, you can buy and sell Bitcoin without intermediaries. When the buyer and seller agree to a trade, an escrow account is opened to hold the Bitcoin to be sold. A smart contract automatically completes the trade when the pre-established conditions have been met. E.g., the price and date of payment. Some buyers accept gift cards or prepaid debit cards as a means of payment. Once the transaction is complete, the seller will release the Bitcoin, which will be deposited in your account.
Use A Bitcoin ATM
Go to the nearest ATM and buy Bitcoin using cash. The number of Bitcoin ATMs has increased recently, so it’s a simple solution if you want to circumvent the requirements of identity verification. When prompted to enter your Bitcoin address, indicate you don’t currently possess one; the ATM will generate a paper wallet. After a while, you can import the private key from the paper wallet and use the Bitcoins as you please. If you already have a Bitcoin wallet, the cryptocurrency will be sent to your wallet via a QR code. Attention must be paid to the fact that Bitcoin ATMs have a limit due to their load at a given time.
Use A Prepaid Card
You can acquire Bitcoin anonymously by purchasing prepaid cards, such as gift cards, from your local store. They can be replenished in cash without any formalities. Indeed, it’s not the most convenient option, but it’s better than nothing. You can use prepaid cards to buy Bitcoin on exchange platforms where it’s traded for fiat money. The process isn’t cheap, even if there are several advantages to the buyer. Once you’ve created an account, you can start your first Bitcoin transaction, so decide how much Bitcoin you want to buy. Check the information to ensure it’s what you agreed to before finalizing the transaction.
Buy Bitcoin Through a Decentralized Exchange
Less information is revealed in the process, but that doesn’t mean you have access to unlimited funds. A decentralized cryptocurrency exchange allows you to trade in a non-custodial manner, so there’s no need for an intermediary to facilitate the transfer of funds. You can buy Bitcoin without having to reveal any personal information. Nevertheless, if you hope to transact larger amounts of Bitcoin, you can do so only if you agree to the KYC process. If you’re not a tech-savvy person, you might find it difficult to use a decentralized exchange due to the technical knowledge required.
Final Thoughts
Raising your privacy level will reduce the chance of getting hacked or becoming a potential target. Bitcoin’s underlying technology, blockchain, relies on cryptography that secures data from unauthorized access and makes transactions more secure. The human element is the weakest link in cybersecurity. Your Bitcoin wallet discloses your IP address, which can be associated with your address. Anyone will know how many Bitcoins you have, when you received those Bitcoins, and the address to which you send the Bitcoins.
All in all, it’s more convenient to reveal your identity when buying Bitcoin but take into account the aftermath. The last thing you want is to make a costly mistake.
Read also:
- The Social Impact of Cryptocurrencies in Developing Countries
- Does Celo Crypto Have a Future?
- Explanation of Why Crypto is Suitable as Legal Money!
- Cryptocurrency Might Remove Reliance on Banks
- 4 Risk-Management Methods for Reducing the Inherent Crypto Risk
- Bitcoin Investment Progress in Culver City
Lucas Brown 
