The nature of bitcoin as a decentralised system of currency, it has great appeal for those who prefer to keep their financial situations private from the government. While it makes sense that people should have confidential and discreet dealings where their money is concerned, it’s quite difficult to separate bitcoin transactions from your banking profiles. With most bitcoin currency exchanges, you can purchase bitcoins online, but it’s linked to your bank account, credit card, debit card or PayPal account. So how do you buy bitcoins anonymously?
There are ways and means to buy bitcoins instantly and still maintain your privacy, but they are more few and far between.
Buy Bitcoins Anonymously Using A Peer-To-Peer Network
A peer-to-peer network is a service that connects people looking to buy and sell bitcoins instantly. The beauty of it is that it also provides you with enough information about the seller so that you can rest assured that you will actually receive bitcoins in exchange for your payment. Vendors selling bitcoin on the platform are given a profile that details how many transactions they’ve made successfully and also offers a rating system that showcases what kind of reliability they hold.
Verifying your identification on most networks is optional, so you can keep your personal information to yourself if you’d prefer. You can also make a cash purchase thus foregoing the need to enter your bank details and link to your bank account.
How it works when buying bitcoin anonymously is that you put in a request to buy X amount in bitcoin. You can then find a match in the list of people selling bitcoin for the same amount and choose a seller based on their profile. They will provide you with a bank account to make a deposit into. Once the transaction is confirmed they will hand over the bitcoin to you, without you having to divulge any personal information except a bitcoin address.
Most sellers don’t like doing business with anonymous parties, but if you’re paying in cash they will often make an exception.
Points to note before using a peer-to-peer network:
- Peer-to-peer trading can be risky, especially with reversible payment methods being available (bank transfers, PayPal etc)
- Sellers can charge high margins for buying and selling bitcoin on these networks. In fact, most use these networks to make a profit
A solution like Wirex is more trustworthy as you can deposit money into a card in seconds and you don’t need to wait days for money to arrive.
Buy Bitcoins Anonymously Using A Bitcoin ATM
If bitcoin ATMs were more readily available, this could possibly be the best option for buying bitcoin anonymously. You can have the bitcoin sent to your bitcoin address, or you can specify that you don’t have a bitcoin address. In the case of the latter, the bitcoin ATM will create a paper wallet for you (a printout of the information for you to keep in cold storage) and you can later import that information into your chosen, more secure bitcoin wallet.
Something to note about buying bitcoin through an ATM is that they put a substantial markup on the price of the bitcoin in exchange for your privacy and convenience. You can look at a price of up to 10% more than current.
Buy Bitcoins With Cash
This method is similar to buying bitcoin anonymously using a peer-to-peer network, except you can make the exchange in person. You would go through the same process of finding a reliable bitcoin seller, except you would select someone in your vicinity. You can arrange to meet in person and exchange cash for the bitcoin. They would then provide you with a paper wallet for the bitcoin amount.
You could also use services that act as an escrow for the transaction. Once the seller has received the cash deposit agreed upon for the bitcoin, the escrow service releases the bitcoins into the buyer’s account.
Use A Bitcoin Marketplace To Buy Bitcoins Anonymously
There are a few bitcoin marketplaces out there and the numbers will no doubt grow. The premise of this system is that it forms a meeting point for two parties who want different things that complement each other. So, for example, someone wants to buy something on Amazon and they want to use bitcoin to pay for it. On the converse, someone wants to buy bitcoin, so they provide a means for that person to buy their desired product from Amazon in exchange for the bitcoin.
For the purposes of this explanation:
- Let’s call the buyer of Amazon products person A
- Let’s call the buyer of bitcoins person B
What generally happens is that both person A and person B will use the bitcoin marketplace to fulfil their needs. Within the bitcoin marketplace, person A will put in a request to purchase a product in exchange for bitcoin, ie: they will use bitcoin to buy their desired product. Person B will either have the product to sell in exchange for bitcoin, or they will fulfil person A’s shopping order simply so that they can receive the bitcoin payment.
With the bitcoin marketplaces we’ve seen, they don’t collect private information and the bitcoin transactions can take place anonymously.