Centralized crypto exchanges ask users to go through a verification process before they can use their accounts. All platforms that allow you to buy crypto via debit or credit card ask for an ID verification, due to their anti-money laundry policies.
But where does that leave our privacy? What happens to our personal information, that is stored on centralized servers, just waiting for hackers to steal it? If in addition to wanting to make money with Bitcoin, you’re looking for ways to buy bitcoin anonymously, without having to go through an ID verification process, this guide will tell you all you need to know.
Table of Contents
- 1 Is anonymity and privacy the same?
- 2 Is bitcoin anonymous?
- 3 How to buy bitcoin anonymously (without ID)
- 4 How to buy bitcoin anonymously on a P2P platform
- 5 Step 1. Use VPN
- 6 Step 2. Get a new email
- 7 Step 3. Create an account on a peer-to-peer platform
- 8 Step 4. Use a bitcoin tumbler
- 9 Buy bitcoin anonymously using a bitcoin ATM
- 10 Buy bitcoin anonymously using DEXs
- 11 Buying bitcoin anonymously isn’t cheap
- 12 Frequently asked questions
Is anonymity and privacy the same?
Anonymity and privacy are not the same. Bitcoin is built on a publicly auditable, open-source database of transactions. Every transaction recorded on this database can be audited by anyone with an internet connection.
This Bitcoin blockchain is a database, also known as a public ledger. It contains all the transactions ever made and records the sender’s address and the receiver’s address, as well as the amount of bitcoin. This means that anyone can see how much bitcoin is in each address. Addresses are not necessarily linked to other information such as a name, phone number, or physical address. Therefore, blockchain addresses and bitcoin are pseudonymous rather than anonymous.
Pseudonymity refers to an individual who uses a fake name or identity to conceal their actions.
It allows Bitcoin users to keep their identities private while still being able to track the total supply of the cryptocurrency. It would be impossible to verify that no additional bitcoin is being created if it was fully anonymous.
Privacy allows us to decide who we are and how we interact with the world around us. It enables us to think freely and without discrimination. Bitcoin was created with such ideals in mind and has much about it that makes it suitable for privacy. However, it is not so simple, as we shall see.
Is bitcoin anonymous?
Bitcoin is anonymous, given that the wallet address is not tied to one individual’s identity. For instance, paying with a credit card is not anonymous, as all card transactions are linked to your identity. But paying with cash is completely anonymous because nobody can trace that cash back to you.
Although bitcoin is more private than credit cards, it is still less anonymous than cash. Bitcoin transactions are stored on the blockchain. Each transaction contains data such as the payment amount, sender and recipient addresses.
Every transaction uses bitcoins from a previous transaction. This means that every bitcoin payment can be traced back, from wallet to wallet. Although addresses can be traced 100%, they cannot be linked to any person or entity. That’s why we call bitcoin pseudo-anonymous.
An individual’s identity may not necessarily be linked to a bitcoin address, but some people may publicly share their wallet address, connecting them to that particular address.
After the association is made, anyone with enough time and determination could examine the ledger. And they can determine how many bitcoins someone has, how they received them, and how they spent them. To be able to say that bitcoin is anonymous, one must take the necessary precautions to ensure that their identity is not associated with transactions or addresses.
How to buy bitcoin anonymously (without ID)
As we’ve already mentioned, your bitcoin address isn’t necessarily tied to your identity, unless you want to tell others about your crypto wallet’s address. But if you’re just starting out and want to buy cryptocurrency, you will soon find out that it isn’t that easy to buy bitcoin without an ID.
When we think about the reason cryptocurrency was invented in the first place, it makes sense that people with this old-school mentality want to preserve their anonymity and privacy when acting online. Because privacy is a right we all have.
Luckily, there are still ways to buy bitcoin anonymously. These methods are slightly more complicated than buying it directly with your credit card from a major centralized exchange. But your effort will be rewarded by being able to preserve your privacy.
The main ways to buy bitcoin anonymously (without ID) are by using:
- Peer-to-peer (P2P) platforms
- Bitcoin ATMs
- Decentralized exchanges
How to buy bitcoin anonymously on a P2P platform
Since centralized exchanges will ask you to verify your identity before buying crypto with fiat, your best chance to perverse your privacy is to use a P2P (peer-to-peer) platform.
Here’s a step-by-step guide on how you can buy bitcoin anonymously using a P2P platform.
Step 1. Use VPN
A VPN (virtual private network) service is worth the extra cost if you want an extra layer for protecting your privacy.
Your connection will not be direct to the internet; but instead, it will be routed through the VPN’s servers. A VPN service will hide your IP address, which is one effective way to protect your privacy, especially when accessing specific internet services.
Moreover, VPNs protect your computer from malware through firewalls and proxy servers.
Check out the best VPN services to use if you want to buy bitcoin anonymously.
Step 2. Get a new email
After you’ve secured your internet connection, it’s time to work on the anonymity side of this bitcoin transaction. Even if you plan on using a peer-to-peer platform to buy bitcoin, you will need an email to sign up for any of these services. Your email is probably already compromised, as you’ve been using it for all sorts of services.
To ensure that nobody can tie back your bitcoin to your identity, you may consider getting a brand-new email, while using a VPN.
Most email services will ask for SMS verification, to verify that you’re human and not a bot using their service. Since you don’t want to tie your personal phone number to that email, consider using a disposable SIM card. Some privacy-oriented email services are ProtonMail and Tutanota, but there are others.
Step 3. Create an account on a peer-to-peer platform
Now that you have your VPN and email ready, you can start browsing the P2P platforms that allow you to buy bitcoin anonymously (without an ID). Some of the most popular P2P platforms are:
- Hodl Hodl (online service)
- Bisq (you must download a software)
You can use these platforms to sign up with your brand-new email and use the disposable SIM card for any SMS verification. Note that financial platforms tend to change policies often, and by the time you read this article, these too may change their requirements.
There are other popular P2P platforms that used to be more suitable for anyone looking to buy bitcoin anonymously, but now, most of them require an ID verification. These include Paxful, LocalBitcoins, and CoinCorner.
By using these P2P platforms, you will be able to buy bitcoin anonymously, post offers, or choose an offer from the list of offers posted by others. You can sort the desired type of transaction, choosing between the different types of payment methods and BTC prices.
P2P platforms don’t hold any funds, but use a multisig escrow to reduce the possibility of theft. The buyer selects the offer, sends the required funds (fiat funds are sent directly to the seller), and then the seller releases the bitcoin in escrow. Since the platforms do not hold any fiat, they don’t require users to go through a KYC process.
Step 4. Use a bitcoin tumbler
If you’re concerned about where the bitcoin comes from or simply want to preserve privacy, you may use a bitcoin tumbler. This is a service that will mix your new bitcoin and add an extra layer of privacy protection.
The coins you get back are taken from a large pool that is maintained by the mixer or tumbler and should not be related to your original coins. However, you should know that bitcoin tumblers are centralized services. That’s why you should use a trusted mixing service, to make sure you will receive your bitcoin back. Make sure to use a service that keeps no records of any mixing transactions.
Buy bitcoin anonymously using a bitcoin ATM
One of the easiest and most convenient ways to buy bitcoin anonymously is to use a bitcoin ATM.
Buying bitcoins via an ATM is probably the best way to go if you want to buy crypto and bypass any verification process. They don’t require an ID and can pay in cash — you don’t even need a crypto wallet. The machine will generate a new paper wallet. Later on, you can import the private key from that paper wallet and send those bitcoins wherever you like.
What’s important to note is that bitcoin ATMs are limited in the amount of bitcoins you can buy. Furthermore, most ATMs charge a fee (up to 10%). If the fee isn’t stated explicitly, then it’s “hidden” in the exchange rate.
Buy bitcoin anonymously using DEXs
Another way to buy bitcoin without compromising your identity is to use a DEX (decentralized exchange). These are decentralized apps that operate on top of programmable blockchains. Unlike centralized exchanges — such as Binance, Kraken, or Crypto.com — which require KYC to process transactions of all types, decentralized ones do not. They only require a wallet address.
However, DEXs don’t use fiat. To use them, you will need a crypto wallet already funded with some crypto. If you don’t have any crypto, then you should look into buying some using a peer-to-peer (P2P) platform or a bitcoin ATM.
Buying bitcoin anonymously isn’t cheap
As with everything involving money, anonymity is reduced greatly when looking to buy crypto online. But there are still ways to cut ties between your identity and wallet address, and one of the most popular ways is to use a peer-to-peer platform. However, this comes at a premium cost.
Since you are not trading with an automated platform, but with real users, each individual may set a different price for the bitcoin up for sale. Cash remains the best way to buy bitcoin anonymously, as this is almost impossible to trace.
Still having trouble with this process? Join the BeInCrypto Telegram group to be guided by some very helpful folks!
Frequently asked questions
Find more: Buy crypto without verification – Krypto-NFTs