Buying crypto anonymously – Pros and Cons

Sponsored content

One of the major reasons why the first Cryptocurrency was created was to promote a decentralized Blockchain that allows users to interact without revealing their identities. Cryptocurrency was therefore created as decentralized finance  (DeFi) through which individuals can exchange values and make payments without revealing their identity. On the other hand, the creation of a Centralized exchange (CEX) seems to be going against the purpose of Cryptocurrency as the founders of these exchanges now requires an identity verification process also known as (KYC) before one can ever interact on their exchange. 

Nonetheless, a few exchange today still allow users to buy and sell Cryptocurrencies without revealing their identity. Many traders today prefer this as it helps to shield their wealth from government probings and to bypass taxations. While doing so has a lot of advantages offered to the trader, there exists yet some disadvantages associated with buying and selling Cryptocurrency anonymously from various exchange. This work has made it clear to all crypto traders the pros and cons associated with buying crypto anonymously from an exchange. The reader has therefore enough information provided in this work to assist them a in choosing which option is best for buying and selling Cryptocurrency.

What does it mean to buy crypto anonymously

Buying crypto anonymously means using Fiat money to buy cryptos from an exchange while a using a false identity other than one’s real name. This practice allows individuals, whales, companies, and other big firms to buy and exchange cryptocurrency without revealing their identities. Often, this is made possible through an exchange. Some exchange today allow users to deposit their fiat currency using any such deposit methods as PayPal, bank transfer and credit card inorder to buy crypto. And then proceed to transfer the purchased crypto to any wallet of their choice. Not all the exchanges have permitted anonymous crypto transactions today. 

Can one still buy crypto anonymously without identity verification?

With the increasing concerns from the government to regulate various centralized exchanges operating in their countries, many exchange now mandate their traders to complete an identity verification process called KYC before they can be allowed to transact on their exchange.  However, a few exchange today still allow traders to buy crypto anonymously on their platforms. To buy crypto anonymously from these exchanges, one simply has to register without completing the identity verification process. Exchange such eToro allows clients to buy and sell crypto anonymously but with a limit of $2250 placed as the maximum amount of crypto, one can buy anonymously. The limit vary according to the different exchanges. Buy Bitcoin Without ID verification and other Cryptocurrencies.

How to buy crypto anonymously without identity verification

To buy crypto without identity verification one needs to choose from any of the above exchange we have listed above. Added to this, we have provided below a step-by-step guide on how you can buy crypto from any of these exchanges above without identify verification.

A step-by-step guide on how to buy crypto anonymously from any exchange without Identify Verification

Step 1: Sign up for an account with the exchange: 

This is the first thing every trader must do to gain access to any exchange. Signing up for an account requires you to choose your user name and password for logging in and the name with which you are to be identified within the exchange.

Step 2: Deposit some funds into the account: 

The next step after creating one’s account is to fund it using any available means such as PayPal, bank transfers, and credit card. The money will be credited to your account as soon as the exchange receives it. 

Step 3: Transfer the money to your spot wallet: 

After one’s account has been funded with USDT  based on the amount deposited, the next step is to transfer the USDT to your spot wallet where you will see the list of all the cryptocurrencies available for trading at the exchange.

Step 4: Place your order for any crypto you wish to buy:

Once the trader has successfully transferred the USDT to his spot position, then he can proceed to place an order for any Cryptocurrency he wishes to buy as long as they are listed on the exchange. 

Very often some exchanges charge a little commission for buying cryptos on their spot position. However, this commission is very little and not something to worry about now. Equally, you can also swap from one cryptocurrency to another on the spot position. The charge for swapping on spot position is fixed in some exchanges like Binance which charges $1 for each swapping, irrespective of the amount swapped.

Finally, after you have purchased the cryptocurrency you desire you can then move it to any storage wallet address of your choice or even send it to other users using their wallet address. To do this, you will need to identify the network of the receiver for the particular cryptocurrency you are sending, and make sure to use the same network in sending the crypto to their wallets. This is very important to ensure that the crypto you are transferring will get smoothly to the address of the receiver.

Pros of buying crypto anonymously

The following are the major advantages of buying crypto anonymously without identity verification.

• It shields the buyer from taxation: Most people who choose to buy crypto anonymously today see it as a smart means of escaping government taxes.
• Protects users’ privacy: Many wealthy individuals and big firms do not wish to declare their net worth to the public. Hence, they prefer to hide their wealth in crypto to shield their privacy.
• Protection from existing laws in the country: Cryptocurrency transactions as we know, is still prohibited in many countries today. Hence, citizens of such countries try to escape government sanctions by buying and selling Cryptos anonymously from different exchange.

Cons of buying Crypto anonymously

There are some disadvantages associated with buying crypto anonymously. They include below:

• It promotes money laundering:  One of the major reasons why the government seems opposed to decentralized finance is because it promotes money laundering. People tend to hide the sources of their income by using decentralized finance such as Cryptocurrency.
• Limitations on the amount to be purchased: Most exchange tend to sanitize their platforms by placing limits on the amount of crypto one can buy anonymously without identity verification. For instance in eToro permits only the purchase of $2250 worth of cryptos for unverified users. 
• High Risk: Buying Cryptocurrencies anonymously bears great risk to both the buyer and seller, especially when both transact anonymously. Thus, there is no way to locate the party involved in cases of a bridge of contracts. 
• It promotes crimes: There is a general opposition today coming from security agents based on the ground that buying crypto anonymously promotes crimes as it can be used to sponsor terrorist activities and makes it impossible to trace them.