Contrary to belief, Bitcoin transactions are not fully anonymous. Just simply buying Bitcoin requires you to provide personal data to adhere to strict KYC (know-your-customer) and AML (anti-money laundering) measures in place.
Some of the personal data and info you’ll be asked to provide can include but is not limited to, your personal phone number, your home address, and a copy of your passport or ID, which will have an image of your face.
Each and every transaction you make is disclosed on a public ledger and, with the data you provide, can be easily traced back to you.
3 ways to buy Bitcoin anonymously
1. Bitcoin ATMs
As its name implies, these ATMs are built with the specific purpose of buying Bitcoin. These machines usually accept payment with cash or a credit card. Though some require having an existing account to transact, ATMs, in general, don’t require any form of ID.
It is a convenient option, provided you’re able to find one. Due to regulations that vary by country, you may not be able to find any such ATM within your country of residence. Additionally, most are unidirectional, meaning you can only buy – and not sell – Bitcoin. Of the total number of Bitcoin ATMs in the world, only 30% offer two-way transactions.
Local Bitcoin is a marketplace where you can find a Bitcoin seller or buyer near your location. In this marketplace, you can see the list of sellers, prices offered, and payment methods. Contact information is displayed so you can easily contact the seller and make your trade-in person.
There are certain risks in transactions like these. Along with having to worry about potential scams, you will also have to contend with revealing personal data to an extent.
3. DEXes – Decentralized Exchange for Bitcoin
A decentralized exchange (DEX) offers an upgrade in privacy and Bisq is a good example of that. **Bisq exchange** is dedicated to Bitcoin Trading only and available to buy and sell in multiple currencies (USD, EUR, GBP, CAD, etc.)
Purchasing cryptocurrency on Bisq is trustless. There are no middlemen or third-party risks. Uploading of any documents like IDs or passports are also not required on the user’s side. Its decentralized nature also means there are no single points of failure in the system.
DEXes, however, still currently face a number of issues. Others still collect personal data, which is a security risk for users. Most also tend to suffer from low trade volumes and slow transaction processing times. Users have to bid for the price they want to sell or buy then wait for someone to take their offers like on the stock exchange.
**If you don’t have the Incognito app yet, you can download it here:**
**Incognito is the world’s first privacy-protecting decentralized exchange**, offering a truly private way to buy Bitcoin. It tackles the current issues faced by existing solutions while continuing to allow users to anonymize their identities and transactions.
No personal data is ever collected or required at any point. Users hold on to their private keys at all times and have full control over their funds.
Incognito also uses shielding, a process that turns any public coin (BTC, ETH, ERC-20 tokens, XMR, etc.) into a privacy coin. A shielding transaction is initiated with proof of deposit of a public coin. Once the transaction is verified by Incognito validators, privacy coins are minted at a 1:1 ratio, meaning you do not lose any value of your coins in the shielding process.
The unshielding process is similar. Once the unshielding transaction is verified with a burn proof, your public coins are released back to the user, also at a 1:1 ratio.
These apply to all transactions – buying, selling or trading. With a pDEX, you can easily buy Bitcoin anonymously, with no ID or KYC needed. If you’d like to find out more about the shielding processes, you can have a read of a more in-depth explanation here.
It’s not just Bitcoin you’ll be able to buy, sell or trade on Incognito Blockchain.
There are over 60 different currencies – and counting – that will allow pairs like **Monero** and Bitcoin to be traded directly. Or if you’re an ERC20 token holder, you’ll be able to perform trades and swaps, all in full privacy.
If you’re worried about long transaction processing times and high gas fees, you’ll be pleased to know that presently, the Incognito Chain has 8 shards that can handle 90-100 transactions per second (tps). Eventually, new network topology will bring the number of shards to 64 that will be able to achieve up to 800 tps.