How To Buy Bitcoin Anonymously?

Even though Bitcoin have a reputation for being secure and anonymous, but they are not always! It might come as a big shock for those looking to buy or send Bitcoin anonymously that every transaction is put on a ledger. Many exchanges have an authentication process that can allow Bitcoin to be traced to the person. Most of the popular crypto exchanges like BitMEX, Coinbase, and Binance will ask for KYC to allow you to open an account with them. You will be asked a number of documents such as your passport, driver’s license, recent photograph, official email address, phone number, and you’re your home address. When these exchanges have so much personal information about you, being anonymous is out of the question. 

However, there are certain workarounds to buying Bitcoin anonymously. There are many different ways, apart from Bitcoin exchanges from where you can buy Bitcoin anonymously. Here are some of them –

Bitcoin ATMs

If you have a Bitcoin ATM near your place, you can purchase Bitcoin anonymously using cash. There are dedicated Bitcoin ATMs in over 80 countries. You just need to insert cash into the ATM, and it will transfer coins into your Bitcoin ATM. The purchases through these ATMs are completely anonymous as the exchange does not record any of your personal information when transferring the funds to your Bitcoin wallet.

Person to Person Purchase

Person to person purchase of Bitcoin is the most anonymous method to obtain Bitcoin. Here, the buyer and the seller meet each other physically to exchange Bitcoin for cash. Most of the time, these people are not known to each other. There are different platforms that can allow you to learn about other sellers and buyers you can meet locally. Many people use an intermediatory or a trusted person to facilitate the Bitcoin transaction. It will help protect your identity.

Buy Anonymously Online

There are a few exchanges that allow you to purchase Bitcoin without the need to verify yourself on the platform. One such example is Bisq. It is a peer-to-peer platform allowing buying and selling cryptocurrencies in real currencies and without registration. However, it does not offer spot prices or liquidity that other platforms offer. One other option is Hodl Hodl, but you might need to share your personal information to make transactions.

Privacy is important when it comes to buying Bitcoin. Without anonymity, your personal information can easily be tracked, and it might be a matter of concern when it comes to online privacy. We live in an era where sharing personal information on social media platforms is the norm. But what people might forget is that sharing intimate moments online may come at a cost. Many people have fallen trap to cyber-attacks and identity theft due to it.

Purchasing or selling Bitcoin is a personal matter, and its details should not be disclosed, such as how many Bitcoin you bought, from where you purchased it, or when you bought the Bitcoin. Many governments are not pro-cryptocurrencies, and people who purchase cryptocurrencies in a large quantity; you might attract attraction from the government. Thus, being anonymous can provide you protection and peace of mind knowing that the transactions cannot be traced back to you. 

Bitcoin Hardware Devices Need To Improve To Handle Complex Transactions

Bitcoins evolution has come a long way since its formation in 2009. It has achieved remarkable success and made way for hundreds of other cryptocurrencies. The Bitcoin hardware has also evolved; however, Bitcoin hardware devices need to improve to handle complex transactions.

Analysis:

Based on the test report released on September 2020, on Casa Blog, by Jameson Lopp, co-founder and CTO of Casa, a crypto custody firm, on Bitcoin multi-signature hardware signing performance, it is said that the hardware crypto wallet devices can handle small and simple transactions well.

However, problems start when the transactions become complicated. Lopp stated that while Casa has no control over the hardware devices, its goal is to support any device.

Lopp’s decision to research the hardware was with the hope to come to some conclusions and help multisig software providers with a better understanding of the limits of the hardware and customize wallet software for better performance.

Casa is compatible with six hardwares, including Trezor, Ledger, Coinkite, and Coldcard. The test was done on all supported hardware, including Bitbox.

Jameson Lopp created a series of tests to determine these hardware wallet potentials when signing multi-signature transactions of varying complexity. He repeated these tests and came to the decision that it is better and more secure if the hardware devices can show progress indicators for loading and signing. 

When it came to overcoming transaction size limitation and delay of transaction processing time, Lopp suggested that hardware wallets should break up and send in multiple smaller transactions that are below its limits.

When the transaction process takes a lot of time, some hardware devices lock themselves from inactivity. Lopp suggested that the least the device manufacturers can do is to disable the screen lock functionality while a transaction is taking place to avoid any inconvenience.

In his suggestions, Lopp also mentioned that the hardware devices should also support partially signed Bitcoin transactions (PSBT) and all possible multisig transactions that are valid.

There are usually two steps to be followed by the hardware devices after signing a Bitcoin transaction. Lopp says, “At first the transaction gets loaded on the device, analyzes the details and then displays them on screen for user confirmation. The details are basically the address to which funds are being sent, the amount being sent, and the transaction fees. In the second step, post confirmation from the user, the device signs each transaction input and then returns the signed transaction to the wallet software.”

Lopp did the testing on the Bitcoin Hardware device based on the following configuration.

Jameson Lopp set up the test by leveraging Electrums’s 4.0.2 appimage on Debian Linux and created various P2WSH (native segwit) multisig wallets that use Bitcoin’s testnet and with the hardware devices plugged in via USB. A deposit of 100 UTXOs was deposited in each wallet for the test.

In the end, the test result indicated that the Bitcoin devices need to improve to handle complex transactions.