Part of the attraction of cryptocurrency appears to be the possibility of remaining anonymous, or at least partially anonymous. The reasons behind wanting to do this vary greatly, and this lies at the heart of what Nakamoto was trying to achieve when he first created Bitcoin back in 2009.

Bitcoin was hailed as a new way to move money globally, independent of third parties or banks, whilst still retaining an element of privacy. This, however, raised major concerns over illicit activity linked to organized crime and suchlike, and so certain specialist companies have in recent times begun to create programs that can track and identify users, which they pass on to law-enforcers and government agencies.

Misconceptions

But, there is a twist; the common misconception about Bitcoin is this whole idea of anonymity.

In its early days, this new and exciting digital currency was basically unregulated. Even so, each and every transaction is recorded and kept in the ‘blockchain’, providing a traceable list relating to a single customer.

The fact is, though, that the customer in question need not have given their real name. If you imagine an author who writes under a pseudonym, people will know the work they produce and link it with the name they have been provided. Any other work, past and present, will now be connected to that name. The author’s real name is not known, only the pseudonym related to the work they have created.

So, in the early days of Bitcoin, a sort of pseudonymity existed, which in effect still remains, but certain companies who deal in cryptocurrencies today will require a definite form of ID for their own satisfaction.

Law enforcement

Due to the concerns about illegal trading, a host of AML (Anti Money Laundering) and KYC (Know Your Customer) procedures were introduced to the cryptocurrency systems, mainly by governments and law enforcement agencies around the world who were anxious and wary of this new way of doing things.

Since 2017, most bitcoin exchanges have introduced measures requiring you to complete a verification process before buying, which includes providing a telephone number as well as photo ID which has to be scanned. The entire process should take less than an hour but reports indicate that for some people this has taken anything up to a couple of weeks.

So, can I remain anonymous?

In short, yes. There are several ways to buy bitcoins and retain at least an element of anonymity, some involving various elements of risk, compromise or ingenuity. But be prepared; many will ramp up their fees as much as 30 or 40% as a result, which may not make the proposition so attractive.

Here is a selection of ideas you may wish to consider:

  • Use a dedicated bitcoin ATM – this is an obvious choice, but in reality, they are found in a very limited number of locations, especially so in countries where cryptocurrencies are banned. In addition, a pre-paid card will increase your anonymity here by keeping the transaction from your credit or debit card records. One thing to bear in mind is that many of these machines will have security cameras nearby, should you be concerned about such things.
  • Mining – not exactly buying, but is a fairly obvious way to get hold of bitcoins, although unless you are planning to invest heavily in the technical side you would need to consider joining a mining pool as the costs involved can be significant for a sole-miner.
  • Use LocalBitcoin – a dedicate P2P platform that prides itself on being ‘fully private’ (keep in mind that this platform has suffered hacks and data breaches in the past)
  • Buy using cash or Paypal
  • Use a crytpo-to-crypto exchange, like Monero, Zcash or Dash

Conclusion

In truth, there are dozens of ways of getting around the anonymity issue, but as stated above, they will probably cost you more. Solutions include using a whole range of sites, such as India.com, Redpayline.com, Changelly.com.

Most of the identification measures in place are there to protect you, but these can usually be bypassed with a little creative thinking, as long as you are prepared to take the risk.

LEAVE A REPLY

Please enter your comment!
Please enter your name here