What I've learned so far about cryptocurrency and anonymity.
Today I’m going to address an issue that I rarely if ever see mentioned in articles mentioning cryptocurrency. It is related to the privacy of cryptocurrency, and how far that privacy reaches, and at what costs.
Isn't cryptocurrency private by design?
Because it’s all nice that, for example, BCH, offer privacy as one of their advantages but it’s good to wonder where that privacy ends. And I am of course speaking of situations like many of us find ourselves in, not the $100k and over kind of crypto-market players. And I hear many of you asking “Is there a difference?”, and the answer is “Yes, kind of”. I'm sure this is not a topic Mr. De Mezel spends a lot of time or effort on, being pretty much the Mascotte of read.cash and spokesperson for BCH in the eyes of many. And even if I am wrong about that, it would be on a different level than I could knowledgeably speak about. I'm talking about/to most of you here on read cash. Joe Average. Jan Gemiddeld. You, me, and the average user here.
What kind of cryptocurrency users are you matters.
For the normal guys and girls that do not have large amounts of money, usually in the range of 100K dollars and up, anonymous bank accounts are not an option. Bank accounts in countries that still have bank secrecy have minimum deposit requirements that are way over what most of us have available.
Bank account with normal old school banks.
All other bank accounts that I am aware of are subject to governmental laws and many have obligations that require them to provide information to tax agencies or some such. In many cases, the banks have requirements an applicant has to fulfill before they can even open an account for you. So in most cases, I think, anonymity in paying with crypto or cashing crypto means “without needing a bank account”. Well, I'll talk about that, as well as other things, in this article so keep reading!
So what can we do, and what will it cost?
Before we get into more details one needs to realize that total anonymity does not exist anymore, unless you go live totally off the grid, and trade for your goods with other goods, or something like that. And even then the anonymity ends with those who you trade with unless you go through insane measures to trade with people to ensure they don’t see you or by other means know you in any way.
At what point does it become difficult?
Usually, you can pretty much be certain that your privacy ends, as far as your identity is known to some company or service, as soon as you want so-called fiat money from your cryptocurrency. Fiat money is government money like dollars, euros, or pounds or something.
Two questions to ask.
Realizing that it becomes the question for what reason you need or want anonymity and what kind of anonymity is reasonably achievable? Let’s look at the first question.
Of course, we all know about the criminals, mostly on the dark web, who use cryptocurrency to do their business anonymously. But generally speaking, they fall in the big money category and therefore not within the scope of this article. I am going to talk about “normal” people with normal means and purposes, like most of us here on read cash.
Why would you want or need anonymity? Well, one example I can give you right away, as I know of people that are in that situation, which is people in a relationship in which for some reason they want their significant other to be unaware of their transactions.
In most cases, this would be what I consider a bad relationship but if for whatever reason you do not want your partner to become aware of all or some of your financial dealings, cryptocurrency can be the answer. Another case maybe someone who’s for some reason or another under supervision and or control by a third party who has access to their bank account information. People with debt help settlements or things like that might find themselves with the need for some anonymity, at least until the amounts get large or stable enough to merit consideration to be used to get out of debt sooner.
There are lots of scenarios in which, more or less, the anonymity of some sort might be required or desired. People who want or need to might find that cryptocurrency provides some options they weren’t aware of yet.
Cryptocurrency can help, to some degree.
Whatever the reason for wanting anonymity, cryptocurrency does provide options with varying degrees of anonymity. The more anonymity you require though, the harder it is to achieve it as well as more expensive. I’ll talk about some of the options here in this article.
Disclaiming disclaimer disclaiming responsibility!
Remember I am in no way an expert and in no way should you take anything in this article for granted, and I take no responsibility for any actions taken based upon information in this article. What you’ll read here is what I have learned through both practical use and researching I’ve done online. ALWAYS DO YOUR OWN RESEARCH BEFORE DOING ANYTHING! Especially anything related to money.
The most anonymous options.
The most anonymous option is always the direct transfer from your crypto wallet to the wallet of someone else and vice versa. The level of anonymity in those cases is limited only by that the currency you use. BTC is one of the least anonymous options in those cases, and I would advise looking into Bitcoin Cash (BCH). But this kind of transaction is limited in everyday use, of course, having to know the address of the other party.
Trading can be done anonymously-ish
Now if all you want to do is trade in cryptocurrency anonymously, taking advantage of the market price changes, I think that Binance is your best option. Though I've got an account with id verification I've read that for amounts under 2btc there is no verification necessary. Of course, that comes with limitations, like no withdrawal to bank accounts and the like but for buying and selling cryptocurrency they should not require id verification. This is true for other exchanges as well, but this varies from exchange to exchange related to your location, the amount limits, and/or the different currencies they support.
Local trade/exchange options.
There is also the option to use “local” services which provide the option to buy or sell cryptocurrencies to and from private parties either locally or internationally through p2p. They usually provide a listing of offerings per country and list the currency you can trade with them and the payment options they support. These are reportedly among the most anonymous ways of transferring, buying/selling, cashing cryptocurrency. They are also among the riskiest, often without guarantees of any kind other than the reputation listed on the site they list their service on.
Buying Gift cards for cryptocurrency
There are only one or two truly “safe” means of anonymously spending your cryptocurrency that I know of today though and that is to buy gift cards with your cryptocurrency. You can choose a number of gift cards these days that accept cryptocurrency, and some don’t even require an address and are sent digitally to an email address or show a code onscreen that you can use to check out. I have not yet found a more anonymous, more convenient way than this. Anyone that does, please enlighten us in the comments!
Buy goods with crypto
Almost as anonymous as gift cards are buying goods from the vendors that accept cryptocurrency. These days there are quite a lot of them and their numbers are growing. If you have the currency a vendor accepts in your wallet and can send those to an address then all you have to figure out is how to receive the things you buy anonymously. You can have it delivered to an alternate location or even order it to be picked up at some location, either of the seller or something like a pick-up point. Pick-up of delivery does usually require an identification though, where delivery at an address usually does not.
Less anonymous but maybe enough for your purposes.
Now for those looking for a less anonymous than complete anonymity but still more anonymous than a normal bank account and still have most of the ease of use that a normal bank account offers, here is a method I have started using.
What I did, and do.
Now for me personally I needed a method that would not be required to report my opening of an account to either the local government or pretty much anyone else without being requested to do so or ordered to provide information by a court order. Why that is I will not detail to you, as it would compromise my own anonymity even more than it already is at this point, potentially getting me into trouble. But suffice to say that I can’t open a bank account with normal banks and the bank account I have, in which I receive my normal income, is monitored.
So I have gone through some hoops here and there which keeps those monitoring my normal day-to-day financial goings-on unaware of my crypto activities. Something which has not really been an issue, having no more than 20 or 30 dollars worth of activities, until recently.
I recently got motivated to look into this because I got rewarded here on read.cash!
Most of you who are reading this are probably aware of the rewards Mr. Marc De Mezel has awarded some of my articles in the past week. (for which I cannot express my gratitude to Mr. Marc De Mezel enough)
Those amounts were definitely going to draw unwanted attention from someone if I would have them go through my bank account or through any services based in my country.
So the first thing I did was get a wallet that offered a reasonable level of privacy, based in a country other than my own. As there might be persons reading this that know me personally I will not name the specific wallet, but anyone who can enter a search in google or duckduckgo can find a suitable one for their purposes. This wallet’s purpose is simple: To receive the crypto from one location and to send it to another location. In my case, the currency is Bitcoin Cash.
Though BCH is more adopted every day and accepted in many places online.
For many things, which increase in number and variety day by day, Bitcoin Cash is accepted as payment, and you don’t need anything else. In those cases, you’re done. But for some things, Bitcoin Cash, sadly, is not going to work. For those, I went and took a few more steps. Now I suspect that pretty soon the intermediate step of opening an exchange account at an anonymous-ish crypto exchange will not be needed anymore but I couldn’t find an anonymous provider supporting the last step in my “method” towards anonymity with cryptos, which was: getting an anonymous crypto debit card.
Be aware though that those cards do have significant drawbacks! First of all, you’re going to have to pay to get one. Second of all, you pay a fee for any transaction you make, and most (but not all of them) charge monthly fees as well.
I know that an audit or thorough investigation will uncover my method.
Now I am sure that if push comes to shove and there is an audit or investigation being performed that scrutinizes my activities in detail, they will end up finding out about some things and if they directly request the exchange for example (which has to comply with national regulations to be allowed to operate) they are going to get my financial information regarding my crypto transactions.
But in order for that to be worth the effort, let alone the cost, of such close investigations there would have to be tens of thousands of dollars worth of suspected transactions. And by the time the amount of money goes through my “method” is enough for an investigation or audit of any kind like that I will happily pay whatever is left to pay for me to end the circumstances and the third party governance and continue on de-anonymized completely.
The easiest way, if you're just looking to circumvent normal banks or if your country has lousy bank systems or something. (or if your economy tanked, and your currency tanked with it)
And let me just mention here that for those who are less concerned with complete anonymity but simply would have a way to have crypto, trade, or exchange crypto and then pay with crypto online (or withdrawal from atm’s or pay in shops) the best option is Binance as far as I have been able to determine.
With one account you get all the exchange options you can think of and you can get their visa credit card, with which you can pay in all shops in Europe (and beyond) that accept visa and get cash at all ATM's where they accept visa which is pretty much all of them in Europe as far as I know. This I have tested myself, before realizing I might want to be more careful about my anonymity in my specific case.
Final thoughts for this article.
I am sure there is a ton more things to say about anonymity, something I began to realize when I started to look closer into it for the benefit of this article, but I think for most of you out there this article will at least give you enough to start you on your way to more anonymity if and when you need it. I will sure be continuing to look out for newer, better, cheaper, or easier ways to remain anonymous as much as possible and of course will share anything I learn with you, the read cash community. If you have any remarks, corrections, or additions to anything I’ve written in this article, or if you have any good advice, please leave a comment! I read all comments and I will correct any errors you point out and try to reply to all messages that require an answer.
Thank you for your interest, time and I wish you health, happiness, and BCH!
If someone is starting out and want to get some cryptocurrency but do not posses the capital to invest in or do not have the means to buy it due to payment issues etc. I would suggest to start mining any new CPU based coin that is resistant to GPU and ASIC.
A coin who's algorithm only supports CPU mining is a good way for someone to start gaining some coins having low-end hardware such as a multicore laptop or desktop computer. Examples of such coins include MicroBitcoinCoin (MBC) or BitWeb etc.