How To Buy Bitcoin Anonymously: A Privacy & Security Guide

By Bitcoin News On Oct 25, 2022

Privacy matters, it is a fundamental human right, and once you go down the Bitcoin rabbit hole, you realize how important it is to sacrifice a little convenience for better protection of your wealth and identity.

This article will guide you through the best practices and tools to buy BTC anonymously while developing a case for more privacy and security through documentation of emblematic events and the importance of protecting personal data.

To facilitate the path to more anonymity, we’ve structured this article into three distinct sections:

This guide has a shared focus on privacy and security, as the two go hand in hand. If you are a victim of a KYC info hack, you will rely on your security setup to keep your Bitcoin secure.

Although the advice provided in this article is well researched and well founded. We ask that you take the information contained therein as guidance and not as a directive. Nothing that we can write can ever be a substitute to doing your own research.

Section 1: Why does privacy matter?

With the advent of the internet, our privacy has faced profound challenges since our personal information is often at the mercy of malicious actors. It is our duty, and in our interest, to make sure that we take all available steps to protect our data.

You don’t need to live under an authoritarian government to risk being persecuted, distressed by the tax authority, or suffering wealth confiscation. Know your customer (KYC) and anti-money laundering (AML) regulations transcend the nature of a government when our data is stored in online databases that are constantly exposed to hackers.

Databases have been and will be hacked, allowing organized crime to steal our data. Identity appropriation, credit card cloning, and bank details theft are only a few risks we constantly encounter. Another reason to avoid KYC-compliant platforms is that they could be in a position to have to reveal personal data to authorities in certain circumstances, such as in the case of the Celsius bankruptcy filing.

When you own a unique asset like Bitcoin and expose your data, you risk compromising your wealth, which might mean everything to you and your family. Furthermore, the data can be cross-referenced with other hacked databases (such as Facebook or Linkedin) to create a complete profile of a potential victim (email, name, address, BTC, etc.).

The yet short history of the cryptocurrency industry has uncovered many hacks, even breaching companies’ systems that claimed to be extremely safe.

Then, you should assume that no exchange or platform is secure enough, and take full responsibility for adopting the proper measures to protect your wealth. Nobody else will do it for you if you don’t do it.

Buying Bitcoin anonymously is less frightening and burdensome than you might think, and it’s completely legitimate other than your fundamental right. If you think you’re breaking the law or doing something unethical, you could not be farther away from the truth.

Is Bitcoin anonymous?

No, Bitcoin is not anonymous, but it greatly depends on your use. While Bitcoin represents monetary freedom, it’s also an open ledger, meaning that all transactions verified and added to the blockchain are visible to everyone.

The ledger doesn’t contain any owner’s data, such as a name and address. However, an increasing number of analytics companies are running their own nodes in an effort to capture data such as your IP address. From there, the road to identifying you is short.

Bitcoin therefore is proving very advantageous to law enforcement, which can be a good thing when capturing bad actors or recovering stolen Bitcoin, like in the case of the Bitfinex hackers. However, with the justification that authorities need to tackle money laundering, terrorism, and illicit operations, such a surveillant system may impact the smaller genuine retail investor heavily.

Bitcoin privacy is increasing via upgrades such as Taproot, Taro, and ZK-Snarks. While Bitcoin is becoming more private, the onus remains on individuals to keep their coins safe and private by avoiding KYC and AML procedures.

What are KYC & AML

Know Your Customer or KYC is simply identity verification of a client carried out by a financial institution to comply with government regulations. It may vary depending on the jurisdiction; however, most identification methods are similar across the board, and these include:

A valid ID card;
name;
email address;
telephone number;
utility bills to prove a home address.

Traders must accept exchanges’ stricter KYC procedures if they want to transact higher volumes. Such procedures include:

A user’s photo;
a selfie holding a piece of paper displaying further information;
a video where you follow basic instructions to provide a 3d view of your head.

Major crypto exchanges prefer to remain anti-money laundering (AML) compliant as it helps them avoid being liable when a user gets away with committing a crime because they failed to do due diligence.

The information you provide to buy KYC’d Bitcoin may be used in the following ways:

to trace your transactions and balances through Chainanalysis;
identify the wallet you engage and transact with;
monitor how you buy Bitcoin;
block you from using regulated services like in Canada;
to confiscate your Bitcoin and make tax claims against you.

KYC is part of a more comprehensive regulatory measure identified as anti-money laundering (AML) to make it more difficult for a criminal or terrorist organization to hide its illicit activities.

However, such regulations defeat the purpose of Bitcoin because they preclude one of the fundamental concepts of cryptocurrency: decentralization.

By providing your data to a centralized entity like an exchange, the pursuit of decentralization and anonymity recedes while the security of your asset is at risk. Even though most cryptocurrency exchanges pledge to provide maximum protection through robust military-style standards, you should never assume they are flawless, and your data may be leaked.

Furthermore, you fall prey to analysis companies that could be in a position to supply your data to third parties and governments.

Is it possible to un-KYC yourself?

Once you submit KYC data, this remains on official record forever and cannot be removed. There are ways to mitigate the impact of such compliance, such as emptying your record by selling your Bitcoin and repurchasing it with no verification to start afresh.

However, this will trigger a taxable event if you sell for a profit unless you live in a Bitcoin-friendly jurisdiction that doesn’t tax crypto holdings. You can also accept that your existing Bitcoin is KYC’d and move on, knowing that in the future, you can buy it in a KYC-free manner.

If you want to sell your Bitcoin and repurchase it anonymously, please keep reading to learn how you can avoid KYC.

Frequently Asked Questions

1. How can I buy Bitcoin without verification?

In-person using cash, decentralized peer-to-peer exchanges, and selected ATMs are all good ways to buy Bitcoin without verification. This guide will help you find the most suitable ways to do it.

2. Can I buy Bitcoin with a debit card with no verification?

Debit Cards are typically an extension of your bank account, which would be fully compliant with KYC. It is possible to add a few extra layers of obfuscation through money transfer services which you can read about below.

Pre-paid or virtual debit cards for online purchases offer softer verification requirements than a typical bank card. However, they are never entirely anonymous since they are reloadable.

3. Can I buy Bitcoin with a credit card with no verification?

Similar to debit cards, soft-KYC pre-paid and virtual credit card options exist. Many payment circuits like Visa and Mastercard offer prepaid credit card payments through automated services like Ezzocard or Blur.

4. Is Bitcoin more traceable than cash?

Yes. Bitcoin is more traceable than cash. Besides appearing in an open ledger available for everyone to see, Bitcoin addresses are “pseudonymous,” meaning they don’t automatically reveal their owner’s identity. If it is used on an exchange that implements KYC, it may be easily linked to a real-world identity depriving privacy.

5. How can Bitcoin be tracked?

Unlike common belief, Bitcoin transactions are highly traceable because they are stored in a public, transparent blockchain, a distributed ledger visible to everyone. Block explorers that track every blockchain transaction are becoming increasingly sophisticated, making Bitcoin addresses, block numbers, and transaction hashes easier to trace.

When coupled with wallet explorers, such tools make it possible to draw connections between addresses and the wallets used to hold Bitcoin.

Section 2: Steps to protect your privacy

Buying Bitcoin anonymously can be challenging, but it’s possible if we buy with cash in person or through a KYC-free ATM. We can also choose KYC-free or soft-KYC exchanges, especially if they support mixers –we’ll go through more on this later.

Unfortunately, the convenience of buying Bitcoin through centralized KYC-compliant exchanges and Fintech comes with a price, and that’s your privacy. However, if you are ready to trade convenience for more privacy, there are ways to go about it, and we’ll go through what they are.

Such methods shouldn’t be intimidating and only require some of your time to dig down some privacy and security steps, from online protection to transaction safety. You won’t need to utilize all the options detailed below, but adopting some of them will go a long way to give you more peace of mind.

It goes without saying that few things in life are unassailable. Any number of the following solutions can be compromised in the future, so best practice would be to understand what each option solves and to combine those that make most sense to keep your identity private.

A guiding principle

If you want to keep your coins private, the first step is to never reveal to people that you own Bitcoin, especially how much you hold, as this will make you a target for malicious actors.

Connecting to the internet

Use a dedicated computer or phone

You should always assume your Bitcoin is at risk online and could be compromised by hackers who could exploit vulnerabilities. You must prevent these vulnerabilities and avoid mixing your general internet use with your Bitcoin wallets and activities.

We always think we are smarter than hackers, but scams, primarily through phishing, get increasingly sophisticated, so it’s better to provide max privacy and security to avoid all chances. A Bitcoin-only dedicated machine is the best way to avoid being tricked into scams using malicious websites and programs.

When choosing your Bitcoin-dedicated machine, it would be helpful to keep the following advice in mind:

The worst operating system is…

Read More: How To Buy Bitcoin Anonymously: A Privacy & Security Guide

Disclaimer:The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. NewsOfBitcoin.com does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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