You're reading this guide because you want to find the best ways to purchase Bitcoin anonymously.
Great! You are taking the first step towards embracing privacy.
The problem is that most people suck at becoming private and then staying private over the long term. Every online action is traceable in 2020. If you slip up even once, you expose your data to collection by many three letter agencies (IRS, SEC, NSA, etc.).
Bitcoin is both extremely hard and easy to trace depending on your actions. If you understand what analysis firms like Chainalysis are looking for, you can take steps to hide your identity.
The first thing you need to understand is Bitcoin is NOT anonymous.
Every transaction is permanently recorded to the ledger and is available for anyone to come and analyze. It doesn't matter how long ago you made the transaction or how small it was. Every transaction provides crumbs for others to start investigating you.
The second thing you should understand is that you must practice good on-chain transaction habits to remain anonymous.
These are important steps to keep you safe. Keep a detailed record of your addresses connected to an exchange with KYC and those which are private. Never send any Bitcoin between the two. In fact, try to use your private Bitcoin as little as possible. The less information you provide, the harder it is for others to track you and create a report on you.
Third, the most anonymous way to acquire Bitcoin anonymously is to mine it.
Freshly mined bitcoin has no identifying metadata to associate it with a real identity. As long as that Bitcoin never moves to an exchange or other service provider that records KYC, IP addresses or other network metadata, it remains anonymous. But it only takes one transaction to ruin this anonymity, so be careful.
But if you don't want to go through the hassle of running miners and waiting a few years, then buying is the best way to go. Here is a list of the best ways to buy Bitcoin anonymously.
In the early days of Bitcoin, there were no exchanges. The only way to trade Bitcoin for dollars was through person to person trades. People would meet up, hand over cash and then have Bitcoin sent to them.
Today this is a risk enterprise. Criminals and other scammers take advantage of these situations to steal and rob buys and sellers. Many P2P Bitcoin sellers refuse to do in-person transactions for this reason.
LocalBitcoins was one of the original places to setup P2P transactions for Bitcoin, however they were forced to implement KYC in 2019.
Now, the best place to setup in-person P2P trades is through Paxful. You do not need to complete KYC to buy Bitcoin on Paxful. However, when you want to sell, they require KYC.
Simply enter in the amount you want to buy and choose your payment method. There are many different cash options to choose from, with in-person cash being one of them.
P2P trades like these often have huge spreads, meaning you will end up paying a significant amount more for the convenience of staying anonymous.
Tips for in-person Bitcoin transactions
- Be careful.
- Only meet in high traffic areas like a mall or other commercial center.
- Make sure you are not followed after completing the transaction.
- Keep your trade below $10,000. Any amount over that you are required to provide your ID. The seller might even be a member of law enforcement trying to trap you.
- Make sure to stay safe and leave the area if you feel uncomfortable ever.
- Trading cash for Bitcoin can be extremely dangerous.
- Get a burner phone for all of your communications.
If you follow these rules, you should be able to successfully trade and stay anonymous.
Another way to buy Bitcoin in low amount anonymously is with a Bitcoin ATM. These machines take your cash and send your Bitcoin instantly. There are several thousand Bitcoin ATMs in the United States currently and you should be able to find one in every major city.
Bitcoin ATMs are essentially a lockbox connected to an automated dispersal wallet. You insert cash, scan your wallets QR code and it sends you Bitcoin to your address.
Most all Bitcoin ATMs have a limit of $250-1000 worth of Bitcoin they will sell before they require ID. You need to search around for a machine which doesn't require any ID for small transactions and you also should invest in a burner phone number.
Bitcoin ATMs charge anywhere between 5-10% fees, higher than a centralized exchange, but less than what you would pay for an in-person meeting.
To be extra safe, wear a mask, hat and other accessories to hide you identity from any surveillance cameras.
Buy online (semi)-anonymously P2P
The only truly anonymous way to buy Bitcoin is with cash, but you may not want to go through the hassle described above.
These sites let you setup trades with interested sellers. You choose a payment method like a bank transfer, the seller's Bitcoin is put into escrow and funds are sent. When the transfer completes, the seller releases the funds and you get your Bitcoin.
Do your research before making a P2P trade. Make sure that the payment method you want to use will not be blocked or reversed by a bank or compliance team. It's really easy to have your bank account flagged and the whole trade fail. I personally lost access to my Venmo account for making a $1000 Bitcoin transfer a few years back.
If you are hyper aware of your online presence and deal only in cash, it is possible to buy Bitcoin anonymously. However, anonymity is something that has to be kept over time, not just when you purchase.
Make sure to stay safe. Cash is easily stolen and you can't reverse a Bitcoin transaction. Choose your trades wisely.
I hope this guide clarified how to stay anonymous when buying Bitcoin. If I missed anything or you want to add another method, reach out and I'll update this article.