Bitcoin is by far the most popular cryptocurrency around the world. Many investment institutions have purchased significant amounts of BTC and other popular cryptocurrencies. In addition, Bitcoin has been awarded the best investment in the last decade. If you bought $1 worth of bitcoin back in 2010, in 2022, you'd have tens of thousands of dollars worth of bitcoin. Let's start with a quick definition of Bitcoin as the protocol and bitcoin that you can exchange and transact.
As time has passed, bitcoin and other cryptocurrencies are making their way into the mainstream and have become a global phenomenon. As a result, using your cryptocurrency to exchange for real money or even pay for things directly has become more accessible. Alongside this, some regions are even exploring bitcoin as legal tender, which is something early cryptocurrency users could have only dreamed about at the start of the great Bitcoin experiment.
What is Bitcoin - The Protocol?
Have you ever noticed the capital letter sometimes used when you see the name Bitcoin? Bitcoin with the capital letter “B” refers to the network itself - a protocol for a decentralized peer-to-peer (P2P) exchange that creates consensus without needing a central authority to provide trust.
Imagine a digital ledger that runs in many computers around the world. Each computer runs software that is compatible with the rest of the computers in the network, and every time there is a new block of transactions verified, the digital ledger updates in real-time on all the computers of the network around the world. Moreover, each computer has a copy of the latest bitcoin ledger, so the network does not depend on any single computer.
In addition to how the digital ledger works, we have to mention the consensus mechanism that bitcoin uses. The name of this mechanism is Proof-of-Work. Essentially it allows all the nodes (computers that run the software) to reach an agreement for when a transaction that is asked to be recorded on the bitcoin blockchain has all the characteristics to be verified.
What is Bitcoin - The Coin?
Bitcoin is a digital currency, the most popular so far, that allows us to make transfers of value assets from person to person without the need for intermediaries. All of this is thanks to four technologies that are P2P network, blockchain, cryptography, and proof-of-work.
There is more! The number of bitcoins to be created has a limit of 21 Million. For this reason, the bitcoin price has the characteristic of being deflationary. You can describe bitcoin's characteristics using many great words, such as decentralized, transparent, fast, irreversible, and pseudonymous. This last one plays a vital role in understanding privacy when buying bitcoin.
What Does Pseudonymous Mean?
First of all, let’s start by defining what anonymity is. According to the Oxford Dictionary, “anonymity” is the state of remaining unknown to most other people. When using bitcoin, you share your wallet address, not your ID. While the transactions associated with this address stay recorded on the blockchain, your more delicate information doesn’t have to. However, there is more to it. Even though it is not automatic, your bitcoin address could be easily linked back to you if enough detail is available.
You might have read or heard about bitcoin as an obscure payment system that allows criminals to transact different illegal products through the dark web with complete anonymity. Even though these claims are inaccurate, they made great headlines! While cryptocurrency is often vilified for these types of potential uses, fiat currency is by far the leader in these issues.
The most well-known incident regarding using bitcoin to buy illegal goods and services is the case of the Silk Road. However, contrary to what many people assume, many of the transactions made on the Silk Road were traced back to platform users in the years following the site being shut down. This loss of anonymity can occur as bitcoin uses a form of public ledger called the bitcoin blockchain, where all bitcoin transactions remain recorded and immutable once confirmed on the bitcoin blockchain. As a result, the path of funds between different addresses over time can sometimes provide significant information to anyone investigating them.
According to the Oxford dictionary, “Pseudonymous” means something “written by somebody who uses a name that is not their own name; using a name that is not their real name. Translated to the bitcoin world, “the name that is not your own is your bitcoin address,” and this is why bitcoin is pseudonymous.
Why Do You Need ID to Buy Bitcoin?
The need to have an ID to buy bitcoin is often a requirement, which is the case for several reasons. The most common one is regulation. Most regulatory agencies in the world, such as those in the USA, expect exchanges to ask for ID before allowing customers to trade bitcoin and other digital currencies. The same issue occurs when you are also trying to sell bitcoin and other cryptocurrencies.
On the other hand, bitcoin was created as an alternative to banking institutions and to disarm the status quo. Unfortunately, government agencies strongly regulate most centralized exchanges, which is why they force you to share your ID and often much more sensitive information.
However, you don’t necessarily need an ID to buy bitcoin. There are many ways to buy cryptocurrency and not require ID. One of the examples of selling or buying bitcoins without ID is directly from another person through a P2P marketplace, at least when your local regulations allow this type of trading.
One of the few marketplaces that support cash-in-person trading is LocalCoinSwap, where you can create an account and start buying and selling crypto with instant sign-up.
Can I Buy Bitcoin Anonymously?
How to buy anonymous bitcoin is a common question. Even though most of the time, anonymity is not well seen, there is nothing wrong with protecting your ID and other private information on the internet. As a general rule, the less sensitive the information you leave hanging around on the internet, the better it is for you and your loved ones. In addition, protecting your ID helps you avoid potential issues like identity theft, fraud, and other related concerns that can be pretty serious.
Transactions are believed to be anonymous, but are they? You can transact with bitcoin without sharing your sensitive financial information or undergoing excessive verification when buying bitcoins. However, this does not mean these transactions are anonymous by default, even if you do so without excessive verification or forced KYC.
When you buy crypto without ID, you are not disclosing your private information such as your name, date of birth, address, and more information about yourself than you absolutely have to (including bitcoin exchanges). At the same time, you are not necessarily wholly anonymous, as all your transactions belong to your bitcoin address which connects you to the bitcoin blockchain.
The pseudonymity of bitcoin has resulted in many people looking to take their financial privacy even further by using bitcoin mixers or bitcoin tumblers. At the same time, while these may be useful, they can vary in quality and reliability. However, they are interesting tools to investigate for those looking for the utmost privacy in their transactions.
How Do I Buy Untraceable Bitcoins?
Assuming Bitcoin is untraceable by default is one of the biggest mistakes people make when talking about cryptocurrency. The truth is that typically many cryptocurrency transactions are easy to trace. On the other hand, what is true is that to transact with bitcoin, you may not need an ID. Still, you have a bitcoin wallet that, if ever linked to your identity via an exchange of another service provider, could show all the bitcoin transactions on the bitcoin blockchain that belong to you or at least those involving that specific wallet.
Even though buying untraceable bitcoins could demand a higher degree of technical knowledge than the average person has. You could do many things to improve your privacy when you buy bitcoin and other cryptocurrencies. For example, using different wallet addresses to send and receive transactions is a great way to increase the difficulty for others who want to track your transactions and balances.
You can also try using a VPN. As we discussed, all your transactions are registered on the bitcoin blockchain when you buy bitcoin. The only reference on the bitcoin blockchain is your bitcoin address. One of the common ways you give up identifiable information about yourself online is through your home or phone internet IP, which is essentially the ID for your internet connection. Once your bitcoin wallet is linked to your computer's IP, getting to know your personal information is just one step away for someone with access to the correct information.
For this reason, using a VPN to regularly change and mask your computer's IP when you connect to the internet is one of the best pieces of advice to keep your privacy safe on the internet and maintain more of your privacy. Finding a quality VPN provider can be done with minimal expense, making using a VPN an excellent option for many people concerned about privacy when trading cryptocurrencies on an exchange, including a P2P exchange. The cost of a VPN can be well worth it in many cases; however, using a VPN requires you to take care from your end to help make the most of it, even if you aren't using one just when you want to buy bitcoins.
Where to Buy Bitcoin Without ID?
Most centralized exchanges such as Coinbase force you to share your ID with them, especially for buying a considerable amount of crypto. There are many problems with sharing your ID or things like your credit card numbers to purchase bitcoins. Sharing your personal information on the internet is always risky. Many of the most popular centralized exchanges that allow you to buy cryptocurrencies after sharing your ID and personal data like your address, have been hacked at some point in their history. Millions of IDs, passports, personal pictures, and more have ended in the hands of hackers and often get sold and traded off to other nefarious parties.
The alternative to a centralized exchange is to buy bitcoins and other cryptocurrencies on platforms that do not force you to share your private details. Better said, buy bitcoin at platforms that do not enforce you to do KYC verification. For example, one of the best ways to buy bitcoins without KYC is by using a P2P platform such as LocalCoinSwap, where you can buy cryptocurrencies using only your email address for registration and without verification if you choose. However, it's essential to understand that vendors will still be required to collect certain information to meet their local laws and requirements in some regions.
Buying bitcoin where you aren’t forced to undergo excessive verification merely to use the exchange is better than disclosing all your personal information in many cases. A couple of reasons to buy bitcoin privately could be that you do not want to trust your personal information to any platform or third party that could be hacked. Another reason could be that your government is not trustworthy, and the chances are that your bitcoin could be at risk if they know who owns it.
In general terms, nobody should be yelling to the world how much cryptocurrency they have. However, it’s also a common problem when trying to buy bitcoins that you simply don’t have the necessary documentation to complete the required verification process to trade cryptocurrency on many platforms. Even when looking at bitcoin ATMs now, there is often a requirement for some level of KYC verification that could be difficult depending on your circumstances.
Using a Bitcoin ATM?
A Bitcoin ATM is one of the many ways to buy bitcoins and sometimes doesn't require verification (or as much as some other methods) around the world. Countries like the USA, Argentina, the UK, and more have bitcoin ATMs in their cities (you can find various bitcoin ATM maps online). However, it is important to clarify that they are not as common as the standard ATM and that Bitcoin ATMs have to be connected to the internet to assist you with a cryptocurrency exchange.
Another critical thing to know about bitcoin ATMs is that there are two different types of bitcoin ATMs. One that only lets you buy bitcoin and the other that not only allows you to buy bitcoin but also sell bitcoin. The most common type of bitcoin ATM is the one that only lets you buy bitcoin, and some may allow you to sell as well, but this typically will have some limitations and be less commonly available.
As it might have happened to you before with a conventional ATM, cryptocurrency ATMs also suffer from poor service reliability and unexpected downtime. Do you remember the last time you walked or drove to the closest ATM just to find out it was not working? Well, a bitcoin ATM is subject to that kind of issue.
In addition to all of these factors, when you buy bitcoin using a bitcoin ATM, it is possible to find fees as high as 30%. Therefore, compared to other alternatives such as P2P platforms, where you can find prices below the market price, a bitcoin ATM with a 10 to 30% margin above the market price is not the best option.
Buy Bitcoin Without ID Anonymously?
We have discussed how you could trade bitcoin without ID verification using P2P platforms that do not force you to do the excessive verification requirements. One example is LocalCoinSwap, where you can buy bitcoin without ID if you need it that way. On the other hand, what happens when you want to buy bitcoin without ID anonymously? To buy bitcoin without ID verification, you could do it with instant sign-up on LocalCoinSwap. However, to buy bitcoin anonymously, you also need a payment method that does not disclose your ID, such as cash-in-person, cash by mail, or other cash-based payment methods, including cash deposits.
Notice that payment methods such as debit card/credit card, PayPal, bank transfer, and more always disclose your personal information, making it easy to link your ID with your bitcoin wallet whenever you make a transaction with bitcoin on the bitcoin blockchain. Even using your bank account for fiat currency exchange can lose your privacy when buying cryptocurrency privately, as this transaction may be later associated with your bitcoin wallet. If you are looking for more private ways to buy bitcoin, a credit/debit card is likely not the best option for you, or at least consider using a prepaid Visa/Mastercard purchased with cash to help you stay anonymous.
At LocalCoinSwap, you can exchange bitcoin without KYC anonymously. You can even make a payment using over 300 payment methods. For example, you could pick cash in person, cash deposit, or other more private payment methods that allow you to make a payment without the need to share your personal information if the person you are trading with is comfortable doing so and isn’t required to by local laws.
Where and How to Buy Bitcoin Anonymously?
After talking about KYC verification, ID, buying bitcoin pseudonymous, bitcoin ATM, and more, you must be asking yourself, where can I buy bitcoin anonymously? Even though you can do this process directly from a person, the chances are that you are going to end up scammed. As in many other trade processes with unknown people, there is a high risk that the one who sends the asset to the other end first gets tricked, and the exchange goes badly.
Ethics aside, there is nothing that forces that stranger to send you bitcoin after you send them your money. For this reason, it is vital to use a P2P platform that protects you through an escrow system such as LocalCoinSwap. Buying bitcoins without escrow or on a more centralized type of cryptocurrency exchange is always a considerable risk, but a risk that can be avoided using the LocalCoinSwap P2P exchange even if you need to avoid verification in your situation.
Should I Buy Bitcoin Using an Escrow System?
The short answer is yes! Trusting your money to people you don’t know is not a great idea. The escrow system is the critical mechanism typical of a P2P cryptocurrency exchange that helps you carry out transactions with strangers without needing to trust them. The P2P platform protects you and allows you to buy and sell bitcoin and other cryptocurrencies safely. Using a P2P with an escrow system such as LocalCoinSwap lets you trade with more people securely, even if you don’t know them. You can read more in our article about using escrow for trading crypto.
If you want to start seeing some funds in your bitcoin wallet address, skip those sketchy unverified bitcoin transactions and start trading securely with escrow. Bitcoin exchange can be more private if you put in a little extra effort to choose the best place to trade bitcoin in your circumstances that suits your requirements.
Privacy is crucial when you buy BTC and other cryptocurrencies and when you access the internet. Even though firewalls and other security apps have made our navigation more secure, there is always the risk of sharing your ID and additional sensitive information on the internet. Sharing your ID, credit card, and personal information with a platform could end up in an unfortunate event where your ID is stolen or, worse, used in a way that affects you financially or even legally. Identity theft is a significant concern, as is fraud when delicate details like your credit card numbers are leaked.
A great solution is a P2P platform that allows you to cryptocurrency while not handing over ID verification or any excessive private information. LocalCoinSwap lets you buy bitcoin with instant sign-up. At LocalCoinSwap, you decide what you are comfortable sharing. Moreover, you have more than 300 payment methods from which you can pick the best that suits your needs. You can even opt for non-custodial trading and non-custodial bitcoin wallets to leverage a more decentralized exchange trading experience.
Another thing to consider is security when you trade. Please consider it before you trade with someone you do not know. Ask yourself this question: What forces an unknown person to send you the bitcoin after depositing the money? And the answer is “Nothing”!
The good news is that you do not have to go through all this risk when you want to buy bitcoin without ID or with ID verification at all. Instead, you could buy BTC and other cryptocurrencies using LocalCoinSwap, whose escrow system helps you securely buy BTC and sell BTC with other traders.
Don't forget to take into account your payment method choice as well, and perhaps skip things like credit card/debit card or using your bank account via bank transfers if privacy is a primary concern for you. If a payment method requires identity verification to get set up and use in the first place, you should consider this payment method one that has reduced assurances of anonymity. Even payment processors requiring a phone number can be regarded as less private. On the other hand, many fantastic payment methods allow users to send payments without handing over too much information. While common order-book-style cryptocurrency exchanges typically don't provide many choices in this regard, P2P trading tends to be the most flexible.
Minimizing the amount of identity verification you perform also reduces the risk of identity theft in the event your documents are leaked into the public domain.
Head to LocalCoinSwap.com to buy or sell BTC your way. You can also join us on our Telegram channel, where we are happy to help you with any questions.