How to Buy Cryptocurrency Anonymously?
Authored by: J. Froentjes
Last updated: 17 July 2022
An introduction to cryptocurrencies’ popularity
According to studies, just around one-third of people worldwide are financially literate. Financial literacy is essential for decentralized finance (Defi) projects, focusing on providing those without access to traditional financial institutions with the correct tools to build their wealth. NBC News conducted a poll that indicates that around 20 percent of all Americans have purchased or traded cryptocurrency. Arguably, not all these investors will be financially literate, and questions arise about whether cryptocurrencies’ growth is justified or simply an inflated bubble.
Table of Contents
Why should one buy crypto anonymously?
Cryptocurrencies partly owe their popularity as an investment to how accessible they have become. As a means of illustration, some crypto exchanges have become substantial market players with billions in market valuation thank to cryptocurrencies’ surge in popularity.
Popular platforms like Binance, crypto.com and Coinbase have managed to piggyback on crypto’s popularity to incredible revenue streams and year-over-year growth. However, larger platforms must take responsibility for the capital in possession, which ultimately increases the fees for the platform. As a result, traders and investors have started looking for smaller platforms willing to sacrifice their profits for accelerated growth.
Naturally, we’ve seen it happen time and time again, first with penny stocks, Ponzi schemes and more. Like with any financial instrument, especially with highly volatile cryptocurrencies that have piqued the public’s curiosity, there are chances for fraud. Pump and Dumps, market manipulation, and theft have led many investors to be more aware of how cryptocurrencies are purchased.Â
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Fraud and theft are why it might be an excellent idea to consider buying your crypto anonymously. Buying cryptocurrency anonymously entails using FIAT money, like the euro or dollar, to purchase cryptocurrency from an exchange while assuming a fictitious identity different from one’s actual name. Individuals, corporations, and other large firms can use this method to buy and sell cryptocurrencies without revealing their identities. The purchase of crypto is frequently made available through an exchange. Some exchanges now allow customers to acquire cryptocurrency by depositing FIAT currency by PayPal, bank transfer, or credit card. Then they transfer the purchased cryptocurrency to any wallet of their choice. Not all exchanges allow anonymous cryptocurrency transfers, creating a market for more creative ways to buy crypto anonymously.
While buying crypto without revealing your identity seems great for avoiding fraud and theft, they are not the only advantages of investing anonymously. For example, it shields the buyer from taxation, meaning they see it as an intelligent way to avoid taxes. While highly unethical, it supports the decentralized ideology of crypto, staying clear of government interference. In addition, some wealthy individuals don’t want their wealth revealed. Moreover, it allows investors to avoid certain geographical restrictions that affect crypto purchases.
What are the downsides of buying crypto anonymously?
Cryptocurrencies purchased anonymously pose a risk to your investment just like a regulated crypto transaction. However, you are still subject to scams and theft if you’re unaware of your surroundings and the process of anonymously buying crypto. For example, you can be robbed at crypto ATMs. According to CNBC, the number of Bitcoin ATMs has sky-rocketed over the last years, causing an increase in money laundering and drug trafficking usage. Moreover, you can easily get scammed while making a transaction, and while you stay anonymous, people still see the person at a Bitcoin ATM.
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In addition, you can be scammed by unregulated brokers offering anonymous cryptocurrency purchases. Be aware that when you invest, you must always do due diligence to ensure that what you do is safe for your money. It’s important to realize that when you make a transaction, you’re entering a contract with the other party. It is challenging to regulate transactions legally when the sellers’ or buyers’ identities are unknown.
Before this article, we talked about investing in sin stocks and how unethical investments can affect our returns and emotions. Similarly, buying crypto with a hidden identity can be unethical since it promotes money laundering. In addition, crypto buyers can hide sources of income by transferring crypto without notifying authorities. Governments are working hard to track down criminals using these methods to pay for or sell illegal products or services. Most importantly, these transactions often send monetary rewards for terrorist activities.
When buying crypto on known cryptocurrency exchanges, a limit on crypto purchases for unverified users is relatively standard. However, this limit makes it difficult for wealthy individuals to use regulated brokers for unverified crypto purchases. As a result, purchasing crypto can pose an increased risk for buyers and sellers since there is no way to track down the individual who might breach a contract when people do deals anonymously. In addition, the risk increases significantly more when both the seller and buyer hide their identities, often subjecting the buyer to scam artists.
First things first – Getting a crypto wallet.
Crypto wallets come in different types, and the type you pick depends heavily on your goals, objectives, and wishes. If you’re with a well-known crypto exchange, you will likely use a hosted wallet. Hosted wallets are cryptocurrency wallets provided by cryptocurrency exchanges. These crypto exchanges store your cryptocurrency immediately. Furthermore, there is no need to have a wallet for multiple types of cryptocurrencies, and investors can easily purchase and sell crypto without many of the usual hassles.
Hosted wallets are also classified as hot wallets. Hot wallets are housed on the internet and provide less security to currency holders, as these wallets are prone to fraud and hacking. At the same time, hot wallets give the investor greater convenience and accessibility.
Cold wallets exist alongside hot wallets. Investors use cold wallets for cold storage, which means they can keep their crypto offline. While digital wallets are not always online, most wallets can connect to the internet for regular transactions. As a result, more considerable sums of crypto are generally considered safer for holding your digital currency investments. Even when the wallet connects to the internet, the private key does not leave your device. Instead, the device requests transaction information and validates the data, completing the transaction.
You should strongly consider your wallet choice. For example, you might be thinking about an SPV wallet. These wallets don’t require downloading the blockchain and are an excellent option for most crypto owners. However, when you’re looking to buy crypto anonymously, crypto SPV wallets display information about the servers you connect to.
Still, some companies offer bloom filters to wallet users to hide their information, which usually comes at an extra cost. SPV wallets have higher effectiveness in terms of anonymity than third-party wallet options, like Coinbase wallets. These third-party wallets are hosted online, and your data is out of your hands. Uncontrollable data should be avoided at all costs when trying to stay anonymous on the internet.
For example, hardware wallets, which are also cold wallets, provide security by preventing private keys from being exposed online. Hardware wallets, which function similarly to flash drives, save private keys on a physical device offline. In addition, hardware wallets are one of the most user-friendly crypto wallet types when it comes to cold wallets since they can connect to PCs or any other device via USB.
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The different ways to buy crypto anonymously – Crypto ATMs
Regardless of the risks of buying crypto, especially anonymously, you might still opt to consider purchasing some cryptocurrency without revealing your identity. Bitcoin ATMs, combined with cash or cold wallets, allow individuals to purchase Bitcoin anonymously. A Bitcoin ATM is a money machine where you can buy and sell Bitcoins. So, a physical Bitcoin ATM takes over the functionality of your PC or smartphone, but the main benefit is that you can buy bitcoins with actual cash. In some cases, you can also withdraw money.
Many Bitcoin users value their anonymity. However, you must ensure that your information and digital assets are not compromised online. When maintaining privacy, you should take extra precautions to secure your digital assets. To keep your digital assets safe, you should only use secure wallets. Anonymous wallets work best for this.
The benefits of using Crypto ATMs
By far, the most considerable advantage of crypto ATMs when talking about anonymity is the fact that KYC is not required to use crypto ATMs. However, in many cases, a limit prevents you from buying substantial amounts. But, you can use FIAT currencies to convert your wealth to digital currencies.
In addition, using cryptocurrency ATMs can decrease the total time spent on digital transactions, especially for buy orders, purchases that are executed directly. However, quick transactions and benefits come with a price. While these ATMs offer prompt and accessible service, the consumer ultimately pays the price in fees. Many people remain unaware of the fees they pay on crypto exchanges and when exchanging on an ATM. However, fees on crypto ATMs can cost you a significant part of your investment, with fees calculated between 7-10 percent of the transaction value.
Accessibility is essential, which brings us to another advantage. The ease of use.
How to buy crypto at crypto ATMs
When using crypto ATMs, the process is straightforward. You do not need to create an account, use an online wallet, or deal with long public keys. Instead, your receipt has a QR code with public and private keys, which can be scanned and instantly recognized by regular wallet apps. When you own a secure wallet, your risk of being exposed to fraud or theft has already decreased significantly, which is why many people love crypto ATMs.
To elaborate, you will have to create an account with the Bitcoin ATM operator, which usually only requires some personal data. However, the lower the amount you buy, the less information you’re generally obligated to fill in. You will have to ensure that your crypto wallet is ready to safely store the records of your Bitcoin transactions, which you can do with a QR code within your digital wallet app.
Depending on where you live, there are numerous sites where you can find a crypto ATM to purchase crypto. To find a suitable ATM, we’d suggest you use https://coinatmradar.com/ to find them. Once there, you will have to add your digital wallet to the ATM, which is where the ATM will send the crypto. After that, you insert your cash, and the crypto is posted directly to your wallet after deducting fees. Finally, you’ll receive a receipt, which proves your transaction and acknowledges the value assigned in your wallet after fees.
Somewhat important to note is that you can also use a Bitcoin ATM for higher amounts of cash. Increased cash deposits can be handy for people who receive a lot of money and want to convert this to a digital currency directly. The only limitation, for some people, is that the operator will likely ask for additional personal information to establish who you are.
What about selling?
Most Crypto ATMs also offer the option to sell crypto, which works like this: on the machine, you’ll select how much you want to sell. After deciding how much you wish to sell and confirming the amount, the ATM will provide you a QR code that you’ll need to scan with your digital wallet. Scanning the QR code will signal to the ATM that your transaction has been approved. After this, you’ll be able to scan your QR code again.
What about other ways to buy crypto anonymously?
Buying crypto through a crypto ATM is not the only way to buy crypto anonymously. While crypto ATMs pose a great solution, they come with limitations, and other options might be better suited for you as a buyer or seller.
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If you want to acquire crypto anonymously, the most straightforward option might be to do it in person. Use Paxful to discover someone nearby who is eager to sell Bitcoins for cash. You can sign up for Paxful with an alias email address. In addition, the verification procedure is unnecessary. Because there is no record for the transaction, it is easy be untraceable when you use cash. Remember that most sellers on Paxful dislike dealing with anonymous customers. However, because you’re paying in cash, this should be less of a concern.
Companies like Paxful are peer-to-peer trading platforms. They are usually founded to make Bitcoin more accessible. The websites allow buyers and sellers of cryptocurrencies to meet and deal directly with one another. The buyer transfers cash into the seller’s account using Paxful payment options such as prepaid VISA, Gift Card Code, and more. Bitcoins are released straight to the buyer when the seller confirms receipt of payments via Paxful’s escrow service. Sellers may accept over 300 different payment methods. Most peer-to-peer trading platforms for crypto have relatively low purchase requirements, and for small purchases in person, you don’t always have to verify your identity. However, you should be aware that sellers will be slightly hesitant to sell their Bitcoin to an unverified individual.
Suppose you live in a nation where centralized cryptocurrency exchange platforms are prohibited or unavailable for whatever reason. Then, these trading platforms are essential since you can use their services from any location with a stable internet connection.
Can I buy crypto anonymously at regulated brokers?
Most regulated brokers perform ‘know your customer’ (KYC) duties since governments monitor them. Allegedly, buying crypto is a popular way of laundering money, and governments are trying to avoid this at all costs. However, if you’re still interested in brokers, there are a few unregulated companies and one may be suitable for you as an investor in crypto.
Buy crypto at CoinCorner.
Take CoinCorner, a complete financial platform that uses digital money and electronic banking to fuel economies that lack access and inclusion. Investors are provided with a wallet and a reliable wallet app that offers a full range of activities, including peer-to-peer transactions, remittances, and point-of-sale transactions. In addition, you’ll have easy access to cryptocurrency and remittance activation by using their ATMs. It allows anybody to buy coins safely with cash in as little as 90 seconds.
Buy crypto at BitQuick.
Another option could be BitQuick, which maintains somewhat stricter guidelines on KYC but keeps the option of staying relatively anonymous. The company functions as an escrow service for Bitcoin transactions involving cash deposits at thousands of institutions around the United States. The concept is straightforward: the buyer and seller agree on a price and BitQuick is where the vendor puts the Bitcoins. The coins are released once the buyer deposits funds into the seller’s account. This procedure necessitates using a mobile phone number, but it does not necessitate using identification. Unlike a picture ID, a mobile phone number can be obtained with an anonymous email address, such as through Skype.
Why you should be hesitant to invest in peer-to-peer crypto platforms?
P2P trading is the process of buying and selling cryptocurrencies directly between users without the involvement of a third party or middleman. When you buy or sell cryptocurrencies on a typical exchange, you do not get to interact directly with the counterparty. Instead, charts and other market aggregators decide the best moment to purchase, trade, or hold Bitcoins. Then, the exchange handles the transaction for you, and the market sets your final price at the time of the transaction.
It’s necessary to understandis that when using peer-to-peer platforms or working with companies that don’t require any KYC or verification, you are subject to fraud. When you buy crypto anonymously, you must concede in some areas. In addition, a lack of regulatory oversight can significantly increase the risk you’re taking.
When participating in P2P trading activity, you must also be aware that the company can have low liquidity, which can significantly impact the price you are paying for a specific currency. Furthermore, if you decide to buy regardless, the platform must still release the crypto from escrow, which could take hours or even days. Therefore, investors must carefully consider the volatile nature of crypto combined with peer-to-peer platforms.
Award-Winning Trading Brokers:
Rating:
Regulated By:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
Demo Account:
✔ Free
✔ Free
✔ Free
Live Account:
$100
$200
0
Spreads From:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
Selection Of Instruments:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
Support:
24/7
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Payout:
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79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Tips for ultimate privacy
You can opt for a browser that offers more security by installing Tor. Using Tor to surf the internet is not prohibited. The download is free, and concealing your IP address and browser history is not unlawful in any way. However, many people who use Tor do so explicitly for anonymity because they are doing something illegal. In addition, most crypto wallets also connect to Tor. When using Tor, your internet activity is hidden. Your browsing history and cookies are instantly cleared when you stop using them. Moreover, Tor has spy detection and prevents others from tracking the websites you visit.
The most crucial factor is that Tor conceals your identity and attempts to make all users seem identical to prevent anyone from identifying you based on the features of your browser or device. Tor does this with multi-layer encryption, enabling your traffic to be diverted and encrypted numerous times on the Tor network to ensure complete anonymity.
The bottom line
To summarize, it is essential first to identify how much online privacy you require. The more anonymized you wish to be, the more work it will take to explore the internet. This article has provided you with the main tools and approaches so that you can mix and match to find what works best for you as an anonymous crypto holder. For example, use cash if you only want to acquire a few coins and don’t want to be tracked. It will take care of most of your problems. On the other hand, if you want to buy crypto without KYC, you might be exposed to an increased risk. However, there are always ways to work around this.
