- Bitcoin is pseudo-anonymous; transactions can be traced and centralized exchanges hold know-your-customer (KYC) information.
- For security reasons, some users prefer to maintain anonymity, for example to protect against exchange hacks that expose KYC information.
- Options for buying and using Bitcoin anonymously include peer-to-peer exchanges, Bitcoin ATMs and dark web tumbler services.
Bitcoin isn’t anonymous. At best, it’s pseudo-anonymous; you can hide your real identity easily enough, but anyone can trace your transactions on a public ledger and leverage that information to find out who you really are.
Seeking anonymity isn’t just the preserve of criminals and those with something to hide; there are plenty of good reasons why you might want to buy anonymously. The know-your-customer (KYC) data held by cryptocurrency exchanges is a prime target for hackers, with several exchanges including Binance and Coinsquare having been hacked in recent years.
Once that information is loose, it’s a tempting opportunity for fraudsters and scammers looking for an opportunity to pry your Bitcoin away from you. The July 2020 hack of Ledger’s customer database led to victims receiving phishing phone calls and threatening emails from criminals trying to part them from their cryptocurrency.
Anonymity keeps your Bitcoin safe, but it also keeps you and your personal life private.
“This kind of privacy is important for anybody who believes strongly in being able to hold wealth and transact it without being constantly tracked,” Ray Walsh, digital privacy expert at ProPrivacy told Decrypt.
There are two main ways of buying Bitcoin anonymously: in-person and online.
How to buy Bitcoin anonymously in person
used to be less regulated than they are now. According to research by Statista, the highest number of Bitcoin ATMs are in the United States. This means that the majority of the world’s Bitcoin ATMs are regulated by the United States’ Financial Crimes Enforcement Network (FinCEN), so it’s unlikely you’ll be completely anonymous on one.
If you’re looking to buy Bitcoin on one of these machines with any level of anonymity, you’ll have to find a Bitcoin ATM that isn’t operating under these or similar regulations. It’s also worth noting that Bitcoin ATMs have purchasing limits, so if you’re looking to obtain a large sum, you’ll need to consider other options.
A second strategy is good old-fashioned physical meetings. Using some peer-to-peer marketplaces it’s possible to find a seller to meet in person by filtering by location, fiat currency, and amount of Bitcoin you’re after. Of course, this requires a degree of trust on both the buyer and seller’s part, and cash-in-person offers are relatively few and far between on such sites.
If you’re lucky enough to know a Bitcoin miner, you can also pay to access freshly minted Bitcoin without any transaction history.
Buying Bitcoin anonymously online
Obviously, offline strategies can only take you so far; the crypto industry’s home is on the Internet, after all. The good news is that there are plenty of ways to reduce the digital footprint of your Bitcoin, including peer-to-peer exchanges, privacy-preserving browsers, and tumbling services available on the dark web.
Also known as decentralized exchanges, peer-to-peer exchanges arrange trades directly between users, without the exchange itself holding any funds. They include platforms such as LocalBitcoins, potentially the world’s largest peer-to-peer crypto exchange; it lets you link up with buyers and sellers individually, as well as choosing your preferred payment method.
By using a peer-to-peer exchange, you can ensure that there’s no centralized entity—vulnerable to hacking—holding your KYC data. To ensure a greater level of security through anonymity, however, you’re going to need some additional tools.
Anonymity tools and Bitcoin tumblers
Firstly, consider using Tor, or The Onion Router. Tor obfuscates your online activity by sending your data to different servers, all of which are heavily encrypted. This makes it incredibly difficult (but not impossible) for someone to identify you. It is also important to use a VPN (a virtual private network) on top of Tor, just in case the first and last machines you connect to via Tor are owned by the same person.
Next up is Tails, or The Amnesic Incognito Live System, which can and should be run alongside Tor. Tails forces all of your computer’s incoming and outgoing connections through Tor itself, and blocks any non-anonymous connections automatically.
Once you are accustomed to using these anonymity tools, it’s time to think about using Tor to find Bitcoin tumbling services. Tumbling (also known as mixing) involves sending your Bitcoin to a tumbling service so that it is returned to you at a different address, thereby obscuring your crypto trail.
There are many Bitcoin tumblers out there, but, in the spirit of anonymity, it’s safest to use a tumbler that is available on the dark web, such as BitcoinMix. At the very least, make sure to use a decentralized tumbler like CashShuffle, so you don’t have to trust a centralized entity with your data.
It’s important to note that dark web services like tumblers are used by bad actors such as money launderers, and have come under intense scrutiny from law enforcement in the past.
After dark web mixer Helix was shut down by law enforcement, US Attorney Timothy J. Shea of the District of Columbia commented that, “For those who seek to use Darknet-based cryptocurrency tumblers, these charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity and charge those responsible for unlawful acts.”
A December 2020 study published by Chainalysis showed that darknet markets trading in Bitcoin—as well as other cryptocurrencies—made more money than they did in any previous year. What’s more, that record only broke in November.
On the other hand, without using anonymizing tools, Bitcoin and other cryptocurrencies are, in many ways, easier to trace than cash transactions.
Fully anonymizing your Bitcoin is a tricky business—and it could be about to get even harder, for US users at least.
The war on anonymity
In late 2020, the US Treasury proposed new regulations to govern self-hosted crypto wallets.
The rule would require banks and money service businesses to “submit reports, keep records, and verify the identity of customers” who make private wallet transactions in cryptocurrency. The effect would be to strip anonymity from private wallets that interact with crypto exchanges, with the exchanges required to perform KYC checks on those wallets.
The crypto community’s reaction was swift—and predominantly negative. Companies including Coinbase and Square joined privacy advocates in condemning the proposed rule, while a bipartisan group of US Representatives queried its accelerated review period. Some 65,000 comments were submitted by members of the public.
For now, the fate of these regulations has yet to be decided, as newly inaugurated President Biden requested a freeze on the Treasury’s proposal.
That, however, is not particularly significant, as the president told all federal agencies that his appointees would need time to review any proposals they have inherited from the Trump administration.
For Bitcoin users concerned with their privacy, it’s an indicator of what may lie ahead; where the US leads, other countries follow, as far as financial regulations are concerned.
Polkadot, Cosmos, Zcash Price Analysis: 14 April
On the back of a significant uptrend, Bitcoin, the world’s largest cryptocurrency, climbed from under $60,000 to over $64,500 in less than 48 hours. At press time, however, the crypto’s bullish momentum seemed to be exhausting itself, with corrections setting in and pulling the value of the larger crypto-market south. The same was evident when the price charts of alts such as Polkadot, Cosmos, and Zcash were taken into account.
It’s been just under two weeks since Polkadot, the market’s 7th-largest crypto, was trading at its ATH. While corrections soon followed, thanks to BTC’s latest foray above $60k, market bulls once again spurred the movement of DOT’s price action. In fact, over the last few trading sessions, DOT hiked by almost 10%.
At press time, however, corrections affecting the Bitcoin market were taking the toll on DOT too, with the alt losing value by the hour.
Whether these corrections will amount to a definite trend reversal, however, is a question that cannot be answered at this moment. While the Parabolic SAR’s dotted markers were well under the price candles and suggested bullishness, the Chaikin Money Flow was healthy, despite noting a dip to correspond with the alt’s price fortunes.
The project was in the news recently after Tether announced that it will be launching on Polkadot and Kusama.
Cosmos, the crypto ranked 31st on CoinMarketCap’s rankings, has had a good last few weeks, with the alt consistently registering higher lows on the back of a sustained uptrend. While ATOM hasn’t been a stranger to brief periods of depreciation, the last few days did see the alt surge by over 17.5% on the charts.
Like DOT, the last few hours did see ATOM correct, however, with the crypto trading over 8% away from its ATH.
While the mouth of the Bollinger Bands was widening at press time to point to some degree of incoming price volatility, the Awesome Oscillator pictured positive market momentum on the histogram, despite some bearish signals.
The development team behind the project activated the Inter-Blockchain Communication (IBC) protocol following a vote by members of the Cosmos ecosystem recently.
One of the crypto-market’s leading privacy coins, Zcash has been on a steady uptrend for the past week, with the same punctuated by a set of brief price falls. One of these periods of depreciation was underway at press time after BTC failed to assert itself above the $64,500-mark. That being said, ZEC was still up by almost 10% in just over 48 hours on the charts.
Zcash’s indicators were very ambivalent, however. The MACD line was diverging away from the Signal line following the brief possibility of a bullish crossover. Finally, the Relative Strength Index exhibited buyer’s strength, with the same very close to the overbought zone.
Zcash was in the news recently after the ECC announced Halo Arc for the “next generation of Zcash.”
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Centurion Invest Launches Copy Trading System For CIEx Traders
Centurion Invest Exchange (CIEx) has launched its copy trading system for its traders. Notably, both novice and intermediate traders can use the new system to boost their earnings, especially in a volatile crypto market. Interested traders can manually copy trades from experienced traders and mutually benefit.
According to H.E. Ali Kassab, Chairman of Centurion Invest, the platform has 25 experienced traders to help cryptocurrency traders make informed and proper decisions.
“Cryptocurrencies are different from other asset types since the prices are volatile, making it much harder for junior traders and investors to establish proper investing strategies. Our copy trading service with over 25 expert traders onboard provides an immediate and convenient trading solution. CIEx novice traders can start trading with an immediate $100 bonus and instantly turn it into profit. As well as accessing the best copy trading feature on CIEx, including trade signals and guaranteed closing with profit, they can also opt for monthly secured income traded funds throughout our investment plans tailor-made for all users,” noted Kassab.
The company has set out a mechanism to incentivize traders who successfully participate in the copy trading system. Kassab further noted that the decentralized nature of the Centurion Invest copy trading platform enables traders to earn by both actively trading and through passive income. Vouching for the platform’s sustainability, Kassab noted that the developers made sure the new platform offers enhanced privacy and more robust security. “Depositing funds and accessing spot and futures trading are made effortless so that novice traders can gain confidence rapidly,” he explained.
By leveraging the power of blockchain technology and human expertise, Centurion Invest Exchange aims to help traders make more profit, especially from the ongoing rally.
In a bid to attract more customers to its platform, Centurion Invest has put in place different mechanisms. One, the company launched a referral program where anyone stands a chance to win bonuses from referring friends. Currently, the platform is running a limited offer to new customers who register an account with the exchange, whereby one stands a chance to win 100 USDT.
Notably, the company strategically launched its cryptocurrency wallet dubbed CI Wallet last month. The wallet provides key features such as Spot Trading, Futures, and Margins. For anyone interested in subscribing to the Centurion Invest Exchange services, the platform supports Visa, MasterCard, bank transfer, and also through top digital assets.
With Berlin looming, how is Ethereum’s price faring?
The 14th of April 2021 is a historic day for the crypto-community, with the Berlin ETH hard fork expected to go live, alongside a Coinbase IPO valued at over $100 billion. Ergo, it does not come as a surprise that altcoins in the top-25 are rallying, alongside Bitcoin’s run to its latest ATH on the charts.
A top metric that underlines how the current altcoin rally is in response to these two events is increased on-chain activity. For Ethereum, the top metric is the number of non-zero addresses, with the same climbing to touch a new ATH of 57 million recently, based on data from Glassnode.
Based on the attached chart, the number of non-zero addresses on the Ethereum network has increased consistently with the price and the trade volume. In addition to the number of non-zero addresses, there has been an increase in major activity and metrics on ETH’s network, just as it has been so on Bitcoin’s network.
As can be observed from the attached chart, despite a 63% correlation between ETH and BTC, on-chain activity has risen exponentially for both assets. The bullish sentiment among traders on top spot exchanges is visible in the Options market as well. ETH Option skews have been decidedly bullish with very little variability in Skew.
What’s more, the implied volatility is climbing steadily for ETH too. What these metrics highlight are a) The strong demand for Ethereum Options and, b) Large ETH call premiums were blocked in anticipation of the price rally post the hard fork.
And, it’s not just Ethereum. Besides ETH, top altcoins like ADA, XLM, LTC, and EOS are rallying in response to these updates and Ethereum’s price rally.
EOS’s trade volume, for instance, was up by nearly 50% in a 24-hour window, while the price was up by over 16%. One of the top EOS price drivers has been the fact that one of EOS’s top markets is Coinbase Pro.
Similar on-chain metric updates were noted for Cardano. On the back of two price rallies over the past month, Cardano’s price, at press time, was at a level where 100% of its HODLers are profitable. Similarly, in the case of XLM, the trade volume has been anticipated to increase since Bitcoin’s price rally gained steam. In fact, the trade volume was up by over 40%, with the price rallying with Ethereum. It is likely that the price rally driven by today’s events and Bitcoin’s run to its next ATH may leave the rally less than sustainable, however.
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