When it comes to bitcoin trading, some people are very serious when it comes to their privacy. There are people who would gladly give up their identity, but are you one of those people? Do you like trading with anonymity for business reasons? For personal reasons? Either you want to be anonymous or not, there are people who prefer their identity secured.
Reasons for keeping your identity secure
There are a lot of reasons to why someone would want to keep their identity secure. On a personal level, you wouldn’t want your friends and family knowing how much you’ve invested in bitcoin. You also wouldn’t want them to know how much you’ve earned. On a business level, you need to protect your assets. You can’t be spurting out how much bitcoins you have.
People like keeping their identity secured so that they can lower the risk of being scammed, hacked, or targeted by criminals. If people found out how much bitcoins you have, you could become a target. If no one knows how much bitcoin you have, no one will come after you. It’s simple, right?
On the other hand, identification plays a big role in keeping bitcoin clean. This is because bitcoin has been used for a lot of illegal activities in the past.
So where’s the line?
When bitcoin first started out, the spike of illegal transactions turned a lot of people off from it. Bitcoin was used for sex, drugs, and money laundering. It was also used to fund acts of terrorism. The ratio of illegal bitcoin to transactions to legal ones was 90:10. Fortunately, bitcoin has changed over the years. That 90:10 ratio has then flipped and now only 10% of bitcoin transactions are used for illegal activity.
Trading with anonymity and illegal activities go hand in hand but what you do with your time and with your bitcoin is completely up to you. You are in control so be sure to use bitcoin responsibly.
Over the years, governments have been attempting to stop the illegal acts that happened and can happen with the use of cryptocurrencies. They’re doing this now with one major implementation: KYC/AML.
KYC/AML means “Know Your Customer/Anti Money Laundering”. This law is implementing a protocol that everyone who wants to get their hands on some bitcoins should undergo a series of clearances before they can do just that.
When KYC/AML laws are implemented on a bitcoin exchange, users are asked for several things. Some will ask for a copy of your ID, a selfie with you holding your ID, birth certificate, billing documents, or any official documents that will and can confirm your identity. This is so that if you ever decide to do anything illegal with your bitcoins, they can catch and reprimand you.
On one hand, it is understandable that people want their privacy when trading. On the other hand, the governments are trying to eradicate the illegal bitcoin transactions. The governments are just trying to keep bitcoin transactions legal. They’re trying to get us to be more responsible when it comes to cryptocurrency. If that’s the case, we, as bitcoin users, should do everything we can to help their cause.
How to circumvent the identity crisis
We understand that there are people out there that don’t want to give up their privacy. Luckily, there are several ways of going around these laws so that you can continue to trading without giving up your identity.
Peer to peer platforms
KYC/AML laws can only be implemented on traditional exchanges. Since peer-to-peer platforms don’t directly sell bitcoins, the law loosely applies to trade platforms. Peer-to-peer platforms merely connect traders. They provide the opportunity for users to find the right trade partner and sell or buy bitcoin with other users. The trade is then completed with little to no interference from the platform itself.
For example, if you want to buy bitcoin at Walmart, you can use gift cards. Vendors will only need a photo and receipt of the gift card, no identification. The requirements of each trade will vary depending on the payment method. Each payment method has its own requirements. Some will actually allow you to buy bitcoins without giving up your identity.
There are three types of bitcoin ATMs. The first one allows you to withdraw and deposit bitcoins. The second lets you convert your fiat currency into bitcoins. The last one allows you to do both. To buy bitcoins without ID, you’ll need to find one that can convert your fiat into bitcoins.
The first thing you’ll need to do is to input your wallet address. If you don’t want to provide your wallet address, some ATMs have an option to generate temporary paper wallets for you. After you input the address, put in the cash and receive the bitcoin. If you used a paper wallet, you can then import the private keys and send the bitcoin wherever you like.
Prepaid cards are easily accessible. You can sometimes find these cards in your local convenience store or supermarket. You can then load the prepaid card and use it as a payment method on peer to peer platforms. With this card, you’ll be able to buy bitcoins without the need to supply any form of ID.
Tips for keeping your identity safe
Avoid reusing wallet addresses
Wallet addresses can sometimes be traced. After every transaction, you should reset your wallet address. Generating new addresses per transaction can help you keep your privacy.
Upgrade your privacy and security settings
There are many ways to upgrade your settings but VPNs are the most used methods. VPNs allow you to mask or spoof your location. If you’re willing to shell out money, you can pay for better VPNs. Look for a good VPN and your privacy will be more secure.
Note: Some peer to peer exchanges may flag your account if they see that you are using multiple IPs.
It also helps to secure your account further by adding 2-factor authentication. Reinforcing your password can also make your account more secure.
Remain in the shadows
When bitcoin was first invented, one of the purposes was having a decentralized currency. With KYC/AML, more identification laws are being implemented. Implementing KYC/AML laws stray away from the original purpose. It’s a good thing that there are still several ways to keep your privacy. With that being said, it’s also important to note that these laws are implemented for a reason. It’s completely your call if you want to surrender your identity, but make sure that you’re using bitcoin responsibly.
- Leveraging Blockchain Technology to Fight Against Fake Vapes - October 1, 2019
- MinedBlock: A Novel Approach to Cryptocurrency Mining - May 18, 2019
- KABN Network: A Blockchain Integrated Financial Service Platform - May 1, 2019