Cryptocurrencies initially gained a high level of popularity as well as appeal for a lot of users due to the fact that they offered a high level of anonymity.
With the increased mainstream adoption of cryptocurrencies for most people, cryptocurrency exchanges that are centralized have boomed in popularity. However, most of them have to adhere to regulations. This essentially means that each user will need to complete a Know-Your-Customer (KYC) procedure.
If you are the type of user that would like to learn how to buy Ethereum anonymously, then we are going to take you on a step-by-step guide as to exactly what you need to do in order to complete this process fully.
How to Buy Ethereum Anonymously: Everything you need to know
The main reason why centralized exchanges utilize Know-Your-Customer (KYC) and Anti-Money Laundering (AML) procedures are due to the fact that they are required to protect both the exchange, as well as all of the users, as well as to keep everything in check in terms of the law, and this is excellent.
However, there are users out there that do not really want to send documentation to these exchanges and want to retain their level of privacy and anonymity. These are investors, traders, and overall users who are not misbehaving; they just simply prefer to conduct transactions anonymously. If you are curious about how to buy Ethereum anonymously, here is what you need.
Why would someone like to remain anonymous when making crypto purchases?
The main reason why a cryptocurrency trader might want to remain anonymous is to reduce the risk of getting hacked or becoming a potential target. Without submitting documentation, a user’s privacy is protected.
However, all blockchain transactions are on a public ledger, which is the blockchain, which can become associated with a user if the user reveals important information, such as the amount of ETH held within that address when the ETH was received, from who the ETH was received from, and the address to which the ETH was sent.
Remaining as private and as secure as possible is essential if you are the type of person who wants to have the lowest level of risk in terms of getting their cryptocurrency stolen potentially.
We will now go over some of the best ways through which you can purchase Ethereum (ETH) anonymously.
- Ethereum (ETH) ATMs
One of the best ways through which you can quickly and easily buy Ethereum (ETH) anonymously is through the utilization of what is known as Ethereum ATMs. These ATMs will not require any user to submit any identification and deposit the newly purchased coins directly into a cryptocurrency wallet.
There are literally hundreds of Ethereum ATMs scattered across the world. However, a majority of them will be found in North America, Europe, and Asia. You can learn more about Counterparty vs Ethereum.
You can even take things one step further by telling the ATM that you do not have a cryptocurrency wallet, after which, assuming this functionality is supported by the ATM supplier, the ATM will print out a paper wallet with the Ethereum tokens on it.
Later on, all you have to do is import the private key from that paper wallet and send those Ethereum (ETH) tokens wherever you would like to. However, while these ATMs do not require any identification, they could have limits on the amount of Ethereum tokens each individual user can purchase. Most ATMs will also charge a fee, which is typically in the range of 7% to 10%.
- Non-custodial Decentralized, Peer-to-Peer (P2P) exchanges
There are multiple decentralized, peer-to-peer marketplaces out there available for a lot of cryptocurrency investors who can make deals directly with one another, rather than having bids and offers matched by an automated engine, which occurs on most large, centralized exchanges.
Peer-to-Peer (P2P) exchanges utilize what are known as smart contracts as a means of locking the cryptocurrency inside a multigeniture wallet until the deal is completed. Then it is released to the buyer once the seller confirms a payment was actually made. Make sure that you also learn about Ethereum vs IBM blockchain.
The FIAT currency portion of the deal will typically occur outside of the platform, and in this case, it is completely up to the buyers to take care of this process. This means that sellers and buyers will typically meet up in a physical, face-to-face location or will accept a variety of different payment methods which will be listed in their ads.
In a case scenario where there is a dispute, and one user says the other one did not deliver their part of the deal, which includes sending FIAT or releasing the Ethereum (ETH) balance, users can still ask the platform to act as a referee. The buyer might provide proof of payment as a means of showcasing that they held up their part of the deal.
Only in this case can the platform control one of the keys to the multi-signature escrow, where the Ethereum is stored for the duration of the deal. There are a total of three keys, one controlled by the buyer, one by the seller, and the third by the platform. Keep in mind that this is not the case for every P2P marketplace out there, and some of them might use different systems. If you’re curious what is the best platform for trading Ethereum, learn about them here.
In any case, the transaction only occurs through two parties, and the crypto travels from one cryptocurrency wallet to another once the ETH tokens are released by the seller.
Keeping your privacy
Hopefully, now you have a heightened level of understanding as to how buying Ethereum anonymously actually works and what you need to keep in mind prior to doing so, alongside the reasons as to why someone might want to remain anonymous in the first place.
Cryptocurrencies gained a high level of popularity in the early years on the market due to their anonymity, so it makes sense that a lot of people might want to use cryptocurrencies as a means of anonymously donating, for example, or transferring funds to a relative.