While it might seem like getting your first bitcoins is easy, the opposite seems to be true if you want to do it anonymously. People can use Coinbase, Bitfinex or Binance quite easily, without any doubt. However, these exchanges will ask for verification, ID or other KYC measures, essentially making all the purchases in the crypto world from that given account non-private.
Yet, there are still tools that can be used to buy Bitcoin anonymously. We have explored different options of how to do it previously, however, now we wanted to look specifically at some of the anonymous bitcoin exchanges or platforms that offer services such as these without any proof of ID or need for verification.
We should definitely start this “quest” by looking at probably two of the most renowned anonymous bitcoin exchanges that do not ask for KYC. These are Bisq and Hodlhodl, which we already mentioned also previously, but now is the time to show why these two exchanges might be the best Bitcoin anonymous exchanges out there.
Bisq is a decentralized marketplace that uses multisignature escrows for improved privacy and security of its users. Bisq does not have a web version yet, which means that the users need to download the software to their computers.
It is important to note right at the beginning that to use Bisq, the users need to have some bitcoin already. This is used as a deposit that is locked within Bisq and serves as a guarantee that the users do not try fraudulent or dishonest activities. The deposit is used as a penalty for such attempts.
The whole process of exchange or transactions is quite straightforward, with people buying and selling peer-to-peer via bids and asks that the exchange portrays. But since Bisq works as a Decentralised Autonomous Organization (DAO), it does not have any ruling power over transactions happening on its platform.
This means that in case there is a problem with the transaction, such as suspected fraudulent or dishonest behavior from either party, the exchange does not have any say in the outcome. However, if the buyer and seller does not come to an agreement, a mediator, which is approved by DAO through locking some BSQ governance tokens, will be a judge of the given case.
Both parties are then obliged to interact with the mediator to solve the problem in hand via providing details about their transactions and the overall dispute. The mediator can only suggest a solution to the case, but cannot enforce it. The mediators also need to behave morally, since they need to lock up BSQ tokens, which can be forfeit in case of their misbehavior.
There are even more specific and unusual cases when the mediator’s solution is not accepted by the parties, however, these are so rare and can become so complicated that we will not dive into them. What is necessary to take from this is that Bisq is not only a very nice P2P decentralized option to buying bitcoin anonymously, but also a pretty fair anonymous bitcoin exchange doing its best to provide highest quality services to its users.
The same can be said about another Bitcoin anonymous exchange, HodlHodl. HodlHodl is a non-custodial P2P exchange that, just like Bisq, uses multisignature wallet, where the smart contract locks the bitcoins being transacted, until the deal is done. It then releases the bitcoins to the buyer, but that only happens if the seller confirms that the payment to their account was made.
The fiat transaction happens outside of the platform and is solely up to the two parties to agree on its terms. Sellers usually list different options of payments they are willing to accept such as bank wires, in-person cash transactions or sometimes even different cryptocurrencies.
The multisignature escrow wallets at HodlHodl works as follows. For each new deal, the escrow generates three private keys. One of them is held by the buyer, another by the seller and the last one by the platform itself (HodlHodl administrator), in case there was a dispute. For any transaction of bitcoins out of the multisignature wallet, two out of the three keys are necessary.
Once the transaction process is agreed upon, the seller locks the bitcoins in the multisignature escrow wallet and waits until the confirmation of the fiat transaction is done. Once the payment is sent and received, the seller unlocks the escrow to the wallet of the buyer.
If either party is not satisfied with the overall process of the transaction, they can ask the HodlHodl platform to resolve the problem, essentially acting like a referee. The buyer is then asked to provide the proof of transaction. If the transaction was sent, since HodlHodl holds one of the three keys to the multisignature escrow wallet, they can, together with the buyer, unlock the wallet and send the bitcoins to the buyer’s wallet.
If on the other hand there was no proof that the buyer sent the transaction, the platform can side with the seller and together they can sign the wallet so that the seller receives the bitcoins back from the locked contract.
Another P2P non-custodial exchange works pretty similarly to HodlHodl. And that is LocalCryptos, which however, does not provide detailed evidence of how exactly the Bitcoin escrow works in case of a dispute resolved by the third-party. It also offers not only Bitcoin buying and selling options but also other cryptocurrencies, which is why we will not dig into LocalCryptos more.
If someone wants to try non-KYC purchases, then there are also standard exchanges that allow for such purchases, but those can be restricting the amounts of capital being used for purchases.
Binance used to be one of them for instance, but now is stricter with the verification process. The same can be said about Kraken or KuCoin. Out of all of these, KuCoin seems to be the best when it comes to anonymity, however, in recent weeks there have been some allegations connected to insolvency of this exchange, so people should not hold significant amounts of capital in their KuCoin account. Or on any cryptocurrency exchange account.
Then there are also some derivative options. These include exchanges such as ByBit, Phemex, Kwenta.io or Lyra. It however needs to be mentioned that most of these examples do not provide spot purchases, but rather swaps or futures with expiration, which means they might be more suitable for gamblers, traders or speculators, rather than for hodlers and long-term investors.
There are also two interesting options, Swan Bitcoin and Relai app, with the former serving the needs of U.S. citizens, while the latter is mostly for people residing in the European Union. Both of them are Bitcoin-only alternatives to exchanges and both offer very competitive prices. These companies however might need either an email address or a phone number for registration, which in some cases might be frowned upon by the privacy extremists.
On the other hand, it still provides a relatively safe way to obtain bitcoin in a pseudo-anonymous way, without any extreme hustle or need for KYC or verification. These two are definitely interesting options to look at, at least, for the beginners or a bit advanced Bitcoin buyers and hodlers.
Bitcoin is not anonymous. However, if the only concern that you have as the user is not how to get to the bitcoins anonymously, but how to spend them in such a manner, Whir offers the solution to that. Thanks to this software, anyone can send bitcoins in a private way, while not being forced to download different apps or create new accounts.
The only thing necessary for Whir to function properly is an already existing, and ideally anonymous bitcoin wallet with some bitcoins and the address of the recipient. Everything else is done in pretty common steps similar to sending any Bitcoin transaction.
The Bitcoin world definitely offers some options of buying BTC anonymously. Some anonymous bitcoin exchanges are better at it, while others not so much, but this article can serve as an easy guide mainly for the beginners if they want to try to get their bitcoins in an anonymous way. These platforms need some improvement especially in the user interface, but practice makes perfect, which is also the case here.
And if you wanted to just transact anonymously and maintain privacy while sending Bitcoin, Whir is always here to help.
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Disclaimer: This article does not serve as a piece of financial advice or encouragement and inducement for the usage of Bitcoin and other cryptocurrencies. Its primary role is informative, explanatory, and educational. The readers have to decide themselves whether to use or not to use these types of services.