Going back in time, it all started way back in 2007 when a person or group of people, known by the pseudonym ‘Satoshi Nakamoto’ started working on the Bitcoin protocol.
Finally, it was released as an open-source software in 2009. It was the first decentralized digital currency ever launched. As a virtue of being decentralized, bitcoin is not controlled or regulated by any individual, organization or government.
The working process of a bitcoin or any cryptocurrency is based on Blockchain technology. Generally, the trading of bitcoins is done through a cryptocurrency exchange platform. But what if a person wants to buy bitcoins without disclosing his/her personal identity? Is that possible? Interestingly, the answer is ‘Yes’.
There are many valid and legitimate reasons for anonymously buying bitcoins. Furthermore, while trading in bitcoins, it is possible to maintain your anonymity only on a decentralized or Peer to Peer (P2P) exchange.
To understand the concept and significant importance of this anonymity, let us first understand the basic difference between the working of a centralized and a decentralized exchange.
Also Read : What is a cryptocurrency exchange?
What is the difference between a centralized and a decentralized exchange (Peer to Peer exchange)?
In a centralized bitcoin exchange, it is mandatory to provide your government ID, utility bills, email address, etc, (and maybe) some other documents too; before you can get on-board. Along with this, the overall working process and the whole system is controlled and regulated. Moreover, it is compulsory to disclose your identity, before you can start trading in a centralized exchange.
On the other hand, a decentralized exchange facilitates direct trading between two individuals. It is also known as a Peer to Peer (P2P) Exchange. In other words, a P2P exchange allows a trader to buy bitcoins ‘directly’ from another trader, or sell it ‘directly’ to another.
We can say that a decentralized exchange works like a dating service, matching people interested in cryptocurrency trading, with each other.
It must be noted that most of the P2P exchanges do not ask for your government ID or other related documents, for any kind of verification whatsoever. Also, anyone can create an account with any name, irrespective whether its a real or a fake name. The approval process of new accounts is negligible or non-existent.
In conclusion, there are two primary differences between a centralized and decentralized exchange. Firstly, there is no ‘middle man’ involved in the latter one. Secondly, you do not need to disclose your real identity and you can maintain your anonymity in a P2P exchange. We can consider these two differences as the main advantages of trading on a P2P platform.
Thus, you can anonymously trade in bitcoins, on these decentralized or P2P exchanges; with your identity kept strictly hidden from others.
Also Read : Is Cryptocurrency legal?
The Best ways to buy bitcoin anonymously:
When you insert cash or fiat currency inside a Bitcoin ATM, then it delivers the bitcoins to your respective wallet. It is similar to a regular ATM, but instead of ejecting out the local currency like dollars, pounds, etc; a bitcoin ATM delivers bitcoins.
Most of these Bitcoin ATMs do not require any kind of verification. Generally, these machines are found mostly in large cities. They are not available in abundant numbers, as in the case of regular ATMs. In order to locate your nearest bitcoin ATM, take the help of a map or use the appropriate app on your smartphone.
You can use your cash or fiat currency in some of the Bitcoin ATMs. For the other ones which don’t accept cash, you will need to use your credit or debit card. It is important to note that generally, these bitcoin ATMs sell the bitcoins at a markup of 5-10 %.
In order to transfer the bitcoins to your wallet, it is mandatory to enter your public address, in which you want your bitcoins to be transferred, for the equivalent amount of cash or fiat currency you deposited in the ATM.
If you don’t have a public address, then specify that you don’t have the same, and then the bitcoin ATM will generate a paper address (paper wallet) for you.
Also Read : Why Are People So Excited About A Bitcoin ATM?
If you want to buy bitcoins anonymously using your credit card, without any verification; then CoinMama is the best choice available for you.
With CoinMama, you can buy bitcoins instantly with a credit or debit card. Moreover, there is no verification required, up to your first $150 purchase of bitcoins.
In some cases, you need to upload a selfie of yourself, holding your credit card, in order to buy coins. But in a majority of the cases, you don’t need to do it.
Before buying bitcoins using CoinMama, you will need to have a wallet. This is because the bitcoins that you buy will be sent directly to your wallet.
For buying bitcoins, first, you need to create an account with CoinMama and then login into it. The next steps have been outlined below :
- After selecting the ‘Buy Bitcoins’ option from the top navigation bar, you need to select the credit/debit card as your mode of payment.
- Enter your bitcoin wallet address and billing information correctly. Post-filling your credit card details, your phone number and email ID will be verified through an SMS and email confirmation respectively.
- As mentioned earlier, you need to upload a selfie with your credit card, for ID verification. Although, this won’t be the case for most of the users.
- Once you make the payment, CoinMama will verify whether your credit card payment was successful or not. If yes, then you will receive a confirmation email for the same.
Finally, the respective amount will be charged to your credit card and then you will receive your bitcoins in your wallet or account in around 20-30 minutes.
3. Local Bitcoins
Local Bitcoins is the biggest and the most prominent of all the P2P cryptocurrency exchanges present worldwide. It is a Bitcoin start-up based out of Finland and has been operational since 2012. It allows a two-way interaction between buyers and sellers.
Under this, buyers and sellers can create offers and respond to it as well. If you want to buy bitcoins, then you can post an offer specifying the amount at which you want to buy. Similarly, a bitcoin seller can post his particular offer, mentioning the selling amount.
Furthermore, both the parties can negotiate with each other, so as to agree upon the terms of the deal. If all of this goes well, then you can deposit cash to your account, in order to make an online purchase. Alternatively, you can also meet the seller in person to seal the deal.
With BitQuick, you can deposit your payment into the bank account of your seller. It facilitates the buying of bitcoin through cash deposits at thousands of banks in the USA.
Both the buyer and seller agree upon an amount. Now, the seller deposits the bitcoins at BitQuick. The coins are released only after the buyer has deposited the cash into seller’s account.
Similar to Local Bitcoins, BitQuick too is a marketplace where buyers and sellers can post various offers, negotiate with each other and finally arrive at a mutual agreement.
Once a transaction has been completed, the seller transfers his bitcoins to BitQuick, which acts as an escrow.
In a nutshell, first, the buyer deposits the required amount of cash into the bank account of the bitcoin seller. Once the seller has received the payment, he gives the confirmation to BitQuick.
Thus, finally after getting this notification from the seller, BitQuick releases the bitcoins to the buyer.
5. Using a Prepaid Card
You can use a prepaid credit card, which you can get at any supermarket or convenience store. Now, bitcoins can be bought using this card, without any kind of verification required.
If you have the required amount of cash, then you can go to your local supermarket. Next, you can swap in your fiat currency for a prepaid debit or credit card.
After this, you’ll be able to use your new prepaid card to buy bitcoins through P2P exchanges such as Local Bitcoins, which do not require any kind of ID or verification process.
With ShapeShift, you can buy bitcoins without any ID, but you need to buy altcoins or other digital tokens, before buying the bitcoins. If you already have an altcoin or a token, then you can instantly buy bitcoins, with no verification.
Basically, ShapeShift allows you to trade one cryptocurrency for another. It facilitates the complete transaction and it’s completely private because everything is done via cryptocurrencies.
The procedure to use ShapeShift is very simple. You need to follow the below-mentioned steps :
- First, you need to select the cryptocurrencies, which you want to trade. Then, choose the cryptocurrency which you want to deposit and receive, in that particular trade transaction. For example, if you have Litecoin, then you will set it as your deposit and Bitcoin as what you would receive. Then, click on ‘Continue’.
– After this, enter your Bitcoin address and Refund address. The Bitcoin address is where your bitcoins will be deposited. If there is any kind of issue, then your deposited bitcoins will be sent back to your refund address. Once you are done with this, click on ‘Start Transaction’.
– Finally, ShapeShift will provide you an address, containing a specific number of characters and a QR code. It will also set the limit of minimum and maximum amounts, which you can send. Once you send your cryptocurrency to that address, you’ll receive your bitcoins within a few minutes.
In all these methods, you don’t require to provide an ID or any verification, to buy bitcoins. But still, you may be tracked with more advanced techniques. Sometimes, you can be recognized and identified through your IP address, or through the private wi-fi network which you use.
It is possible that you may accidentally disclose your Bitcoin public address, online over the internet. In addition to that, a seller may track you down from your mobile number or vehicle number, while doing in-person (face to face) Bitcoin deals with them.
If you know some other ways of buying bitcoins anonymously, then we would love to hear them from you. Please feel free to leave your valuable suggestions and feedback, in the comments section below.