How to Buy Bitcoin Anonymously
As we have previously written about on Hacked.com, many people hold the false belief that bitcoin, by its very nature, is anonymous. However, as transactions recorded on the blockchain are available for anyone to see, this is not entirely true.
Still, the biggest issue when it comes to privacy arises when someone wants to buy or sell his or her bitcoins for fiat currency. Going through an exchange requires an often lengthy verification process where you need to upload things like your passport, proof of residence, bank statements, etc. It is really a far cry from the privacy that bitcoin and cryptocurrencies were envisioned to offer.
Fortunately, we do have a few solutions to this problem. In this article, we will guide you through four of the ways that exists for buying bitcoin anonymously, either online or offline.
1. Using a bitcoin ATM
With the number of bitcoin ATMs currently exploding, buying bitcoins through an ATM is perhaps the most obvious option for anyone wanting to avoid all the requirements that come with traditional fiat to bitcoin trading.
The catch with this option, though, is that there is usually a buying limit of around USD 750 before you need to present your ID. However, as long as you stay below this amount for each transaction, your purchase will be completely anonymous.
As bitcoin ATMs are still not very commonly found, you do depend on having one nearby. Currently, about 75% of all bitcoin ATMs in the world are located in North America, with some also found in major European cities.
2. Buying bitcoin peer-to-peer
By far the most popular peer-to-peer bitcoin trading platform out there is LocalBitcoins. Using this platform, you often have the option of meeting up in person with a specific seller who is willing to trade is bitcoin for cash in your local currency. LocalBitcoins have sellers listed in more than 10,000 cities across the world, so there are good chances you will find someone not too far from your location.
All you need to do to start using LocalBitcoins is to sign up on their website with an email address and username, and then start looking for people who are willing to sell bitcoin to you in your area.
Make sure to check the reviews of a seller before you agree to make a trade. Sellers with plenty of good reviews are safe to use, but you should be careful buying from sellers with few or no reviews. There have even been cases where people have been fooled into traps by undercover police officers posing as sellers in countries where crypto trading is illegal or requires a license.
3. Use a prepaid debit card
In the US and some other countries, it is possible to walk into any convenience store and buy a prepaid debit card that you can load up with cash over the counter. You can then use the same card to buy bitcoin on any fiat-to-bitcoin exchange such as Coinbase or Kraken in just the same way as you would have done if you used a debit or credit card from your bank.
This may be a less convenient option, but if there is no bitcoin ATM or LocalBitcoins sellers nearby, using a prepaid card may be your best shot.
4. Using a decentralized exchange (DEX)
Perhaps the most anonymous way to buy bitcoin online is to use a decentralized exchange, something most people in the world of cryptocurrencies are not very familiar with yet.
Decentralized exchanges are largely a new concept, but they are by many seen as the future of bitcoin and cryptocurrency trading. However, current platforms are still a bit complex for non-technical users, but this is a field that is quickly moving forward. Binance, one of the biggest cryptocurrency exchanges today, has even said that they are working on a decentralized exchange expected to be launched in the not-too-distant future.
When using Bisq, no ID verification is necessary and the exchange does not hold any of the user’s funds, which also makes it a much safer choice than traditional centralized exchanges. To buy bitcoin using this service, you would make a cash deposit equal to the amount of bitcoin you wish to buy, and then contact a seller directly. Lastly, an escrow service is used to ensure sellers get paid the cash and buyers receive their bitcoin.
Featured image from Pixabay.