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Though you can buy Bitcoin without identity verification, it can be less convenient and more expensive.
If you’ve looked into buying Bitcoin or any other cryptocurrency, you may have heard of the Know Your Customer (KYC) process required by all the major, centralized exchanges. To buy and sell crypto without restriction, you need to provide your personal information and identity documents.
Exchanges do this to reduce risk. The KYC process helps them prevent fraud and money laundering. Not all crypto enthusiasts are keen on it, though. If you want to stay anonymous while you purchase Bitcoin, it’s important to know your options.
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Can you buy Bitcoin without verifying your identity?
Yes, you can buy Bitcoin without verifying your identity. There are two ways: decentralized exchanges and Bitcoin ATMs.
Although both options allow you to buy crypto without identity verification, they work much differently than the usual process. They also have their drawbacks compared to buying through a centralized exchange.
A decentralized exchange connects buyers and sellers for peer-to-peer transactions. There’s no middleman to facilitate trades, like there is with centralized exchanges. A couple of the most popular decentralized exchanges are Bisq and LocalBitcoins.
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Both buyers and sellers can create offers on decentralized exchanges. If you want to buy Bitcoin, you have two options. You can create an offer with the amount you want to buy, the price you’re willing to pay, and your payment method. Or you can browse seller offers. These include the seller’s price, the amount they have available, and the payment methods they accept.
When you’ve agreed to an offer, you send the money to the seller. The seller then sends the crypto to your wallet. Decentralized exchanges have security features such as escrow services, security deposits, and arbitration to ensure no one gets scammed.
This type of exchange is a good way to buy and sell crypto without verifying your identity. But there are a few potential issues:
- The process isn’t as easy as buying through a centralized exchange. You need to sort through sellers to find one offering a reasonable price, the amount of crypto you want, and a payment method you can use.
- Prices vary quite a bit. In some cases, it’s more expensive to buy through a decentralized exchange. Sellers may feel they can charge a premium because the buyer doesn’t go through a KYC process.
- You need to have a crypto wallet, and it’s your responsibility to keep your wallet secure.
A Bitcoin ATM is just what it sounds like — an ATM where you can buy and sell crypto. While some Bitcoin ATMs only offer Bitcoin, many also have other coins.
To find a Bitcoin ATM near you, visit Coin ATM Radar. It has a database of these ATMs all over the world. The exact process to buy and sell Bitcoin through an ATM depends on the machine, but here’s how it generally works:
- To buy from a Bitcoin ATM, enter your crypto wallet address. Deposit cash into the ATM, and it sends you the crypto.
- To sell with a Bitcoin ATM, get the deposit address from the ATM. It usually provides a QR code you can scan. Send your crypto to the address. The ATM pays you in cash.
Bitcoin ATMs are more and more common, but you can only use this method if there’s one in your area. It’s not as convenient as buying crypto online, since you need to go to the ATM to buy or sell.
One more downside is that Bitcoin ATMs tend to have very expensive fees. It’s not uncommon to see transaction fees of 10% or more. With Bitcoin ATMs, privacy comes at a cost.
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Buying Bitcoin anonymously
To recap, you have options if you don’t want to verify your identity to buy crypto. Decentralized exchanges, such as Bisq or LocalBitcoins, are the best place to start. These typically cost much less than using a Bitcoin ATM.
Before you go with either option, consider how important avoiding identity verification is to you. The KYC process can be inconvenient and slow, but you only need to go through it once with a centralized exchange.
If you’re willing to verify your identity, you can choose any of the best cryptocurrency exchanges. Many are much more user friendly than decentralized exchanges or Bitcoin ATMs, and you could also get a better deal when you buy.
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About the Author
Lyle is a writer specializing in credit cards, travel rewards programs, and banking. His work has also appeared on MSN Money, USA Today, and Yahoo! Finance.