Buying Bitcoin Anonymously - The Complete Beginners Guide
Bitcoin has sparked a revolution of decentralized cryptocurrencies, and while it does contain some aspects of privacy, it certainly isn’t the anonymous privacy coin such as Monero or Zcash.
But it is possible to remain anonymous when buying Bitcoin, and this article is going to tell you exactly how to do just that. There are many reasons to wish to remain anonymous when purchasing Bitcoin.
Some are nefarious to be sure, but for some it is simply a matter of maintaining their privacy in an increasingly monitored and fully transparent world. Some cryptocurrencies are better than others when it comes to anonymity, but because Bitcoin is the most widely accepted cryptocurrency, there are good reasons to stick with the granddaddy of decentralized digital currencies, while also increasing your privacy.
People have been fooled in some respects regarding Bitcoin, because they’ve been told that using it maintains privacy, but this isn’t true any longer. In most cases Bitcoin is bought, sold and traded through online exchanges, which are themselves centralized and in some cases regulated.
These exchanges typically require your name, email address, physical address and even copies of your ID documents. With this all in hand, your privacy is gone. The exchange has complete records of who you are and your Bitcoin transactions, and if they choose to do so they can hand this information over to the government at any time. It could even be used for marketing purposes.
If this is something you’d prefer to avoid, read on to learn how to buy Bitcoin anonymously and avoid being tracked or targeted.
They Say Cash is King
Not only is cash king, but it is truly anonymous. There is no tracking of physical cash, which makes it perfect if you wish to remain anonymous when purchasing goods and services. And that goes for purchasing Bitcoin as well. If you want your Bitcoin purchases kept completely anonymous simply do it with cash.
Cash is actually the easiest method for purchasing Bitcoin anonymously. If you don’t know anyone personally who is selling Bitcoin, that’s not a problem either, because there are peer-to-peer marketplaces where you can deal with Bitcoin sellers who are happy to accept cash. What are these P2P marketplaces? Here are two of the top choices:
LocalBitcoins is a long standing peer-to-peer marketplace that brings buyers and sellers of Bitcoins together. In addition to having an online marketplace, which does require some personally identifiable information, because LocalBitcoins provides escrow service for purchases, it is also possible to set up in-person meetings with sellers.
A trusted seller profile at LocalBitcoins Source: LocalBitcoins.net
In this case you hand over cold hard cash, and the seller transfers the Bitcoin to your account. So, the only people who know about the transaction are you and the seller, and they don’t have any of your personal information to share with anyone in the future.
Coinmama is one of the oldest peer-to-peer marketplaces, but differs from LocalBitcoins in that you are purchasing Bitcoin directly from Coinmama. This means you can’t meet directly with them, but you can do cash transfers via Western Union to purchase Bitcoin (and Ethereum).
Registering at Coinmama is so simple. Source: coinmama.com
Or you could purchase a pre-paid credit card using cash, and then use that pre-paid card to complete your Bitcoin purchase through Coinmama. In either case, you remain anonymous, which is the goal.
Get Your Bitcoin from the ATM
Image via youtube.com
You might not be aware of it, but there is such a thing as a Bitcoin ATM. Just like any other ATM there is no personal identifying information needed to use a Bitcoin ATM. You simply deposit cash and receive Bitcoin in return. It’s as easy as telling the ATM your Bitcoin address and how much Bitcoin you’d like to buy.
And if you don’t have an address handy the ATM will give you a paper wallet with the address, which you can later use to transfer to the wallet of your choice. Need to find a Bitcoin ATM? This map will help – currently listing 2,640 Bitcoin ATMs in 65 countries.
I undersand that some of you reading this might not be able to use LocalBitcoins, Coinmama, or a Bitcoin ATM for one reason or another. If that describes you, there’s still some options you can use to remain at least partially anonymous when purchasing Bitcoin.
You still won’t need to provide any personal information or ID, but you will need a phone number to use these services.
Wall of Coins
If you’re U.S. based you can use Wall of Coins to buy Bitcoin with cash. This is a peer-to-peer marketplace, but they operate a bit differently. All coins are escrowed by them. Payments can only be made in cash through a bank deposit.
Once Wall of Coins verifies the bank deposit they release the Bitcoin to your wallet address. Wall of Coins allows Bitcoin purchases of as little as $5. Wall of Coins is working on availability outside the U.S., and the website itself already support Chinese, Portuguese, Cantonese, Russian, and Spanish languages.
Image via bitquick.co
BitQuick works in a similar manner to Wall of Coins mentioned above, acting as a middleman to the transaction and releasing Bitcoin to the buyer and cash to the seller once a deposit is made. If you can use Wall of Coins it’s preferred however, because BitQuick has a higher minimum purchase of just over $20, and also has a 2% service fee and 0.001 BTC mining fee.
Additionally, you are limited to $400 daily purchase from BitQuick, unless you upload an ID to them. Which of course negates your anonymity.
As you can see from the above there are several options for making anonymous Bitcoin purchases. If I had to rank them from best to worst, I’d probably say that a Bitcoin ATM is your best choice, followed by LocalBitcoins, then Coinmama (more expensive). Wall of Coins would be my next choice, followed by BitQuick (again, more expensive).
Does this mean that no one can track what you do with your Bitcoin? Unfortunately not.
Given that the blockchain is an immutable public ledger, anyone can analyse it and trace payments. Indeed, this is what the companies such as Chainalysis and Bitfury are now doing using innovative clustering algorithms and blockchain audits to catch the crooks.
However, if you don't plan on doing anything illegal and merely want to protect your annoymity, any of the above methods should tick your personal privacy boxes.
Featured Image via Fotolia
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.