Try buying cryptocurrency online in the United States, and you’ll be bombarded with requests for identification.
- Scan a copy of your passport or drivers license and upload it.
- Provide a “selfie” of your face.
- Give your full name.
- Give your email address.
- Verify your email address.
- Add a phone number.
- Add your home address.
All followed by your bank information or credit card details to make the payment.
When I last logged into Coinbase, they even showed me this message, demanding the source of my funds and job information.
This was all mandatory, by the way. The message said Coinbase cannot continue offering me its services unless I complete every field.
So how exactly do you buy bitcoin or other cryptocurrencies without giving up your personal information? As with most things, protecting your privacy requires a little more hard work and a lot less convenience.
Localbitcoins.com (trade with cash)
Localbitcoins was one of the earliest ways to buy and sell bitcoin, and it remains one of the few truly private ways to do so. It’s a peer-to-peer network matching bitcoin sellers with buyers. However, there’s a catch; to make a private purchase you need to pay in cash.
You can sign up to localbitcoins.com with an alias email address and then search for sellers accepting one of the various cash methods (cash by mail, deposit, or at ATM). Sellers are all ranked with a trust score, so pick a seller with a strong rating.
If you were to choose an electronic transfer method, you’d need to register with more personal information. A similar service to localbitcoins is Paxful which has a private “cash in person” exchange option.
Some bitcoin ATMs don’t require any ID or registration to use. You’ll also need to find an ATM that accepts cash and prints a paper receipt.
When you purchase bitcoin from an ATM, you’ll usually be asked to provide a bitcoin wallet address. To stay truly private, choose instead to print a paper receipt. It will generate a unique bitcoin address for you. From there you can move the bitcoin to your own wallet or address of your choosing.
To find an ATM near you, search your city on CoinATMRadar.
What about crypto exchanges?
If you live in the US, your options are extremely limited. Any purchase of bitcoin with dollars online will be subject to KCY regulations.
If you’re outside the US, some exchanges have no ID checks, such as BitMEX.
Buying bitcoin with another cryptocurrency?
If you just want to switch between cryptocurrencies, that’s a different story.
You can change litecoin into bitcoin using a simple crypto-to-crypto exchange like Changelly without verifying your ID, even in the US. The only stipulation is that Changelly does have a “risk scoring system.” The website explains: “If a transaction is flagged by the system, it is put on hold and the User is asked to pass AML & KYС verification.”
Changelly maintains that 99.5% of exchanges are made anonymously, so unless you’re moving large sums between private coins, like Monero, you’re probably fine.
Other crypto-to-crypto exchanges, like Binance, don’t require ID verification for “Level 1” trading. But if you wish to withdraw more than 2BTC per day, you’ll need to verify your ID.
It’s frustratingly difficult to purchase bitcoin without handing over your identification, particularly in the US. Buying with cash on a peer-to-peer network or via an ATM is the best option for beginners. Luckily, once you have your bitcoin, changing it into a different cryptocurrency with anonymity becomes easier with crypto-to-crypto exchanges.