As a peer-to-peer cryptocurrency, Bitcoin is a symbol of financial inclusion. Satoshi Nakamoto has explicitly designed the cryptocurrency so that it can be used without an intermediary. To get started, all you need is wallet software, which you either have to install on your smartphone or computer. Actually.
Because if you don’t get Bitcoin as a free airdrop, you have to take a small but important intermediate step: buy Bitcoin. And here it was usually the peer-to-peer method, because without an intermediary there are no coins. This is not a problem at first; Most exchanges these days are serious (if you are looking for tips for choosing a Bitcoin exchange, you will find it in our guide). However, when buying BTC through regular brokers like bitpanda and Bison quite extensive KYC processes. KYC stands for Know Your Customer and describes the due diligence process that the legislator imposes on financial institutions in order to make criminal offenses such as money laundering, terrorist financing or tax evasion more difficult. There is nothing wrong with that at first. In concrete terms, however, KYC means that customers have to leave a whole range of sensitive information with the company: ID documents, insurance numbers, bank details and personal addresses are part of the standard repertoire.
And that can backfire. Data leaks like that from Binance in August 2019 or the Ledger Leak about a year later are only the spearhead of a history of data theft in the crypto ecosystem. Information that allows conclusions to be drawn about financial data is particularly worth protecting.
But even if nothing goes wrong, have Binance, Kraken and Co. Access to sensitive information that not everyone would like to see in company hands: For example, the exchanges can see to which address purchased coins are sent – and how high the Hodl stack is already. So there are good reasons to think about buying Bitcoin that leaves the data behind as little as possible. And there are ways to do that.
Get paid in Bitcoin
Probably the most obvious way to get Bitcoin without having to use an exchange is to receive the salary in Bitcoin. Because, like fiat money, you can also earn Bitcoin. For many, the incentive to be paid in deflationary money is likely to be greater than having inflationary money on the paycheck.
However, there are some tax pitfalls to be aware of here. Because if you only earn Bitcoin, for better or worse, you will have to change one or the other Satoshi into euros and co. To pay the rent, for example. The proceeds from the sale should then, however, be subject to income tax.
Untouched Bitcoins are only available fresh from the mine. Each block (currently) 6.25 BTC comes into the network – i.e. about every ten minutes. Contrary to what is often assumed, you don’t have to dig too deeply into your wallet for this: If you join a mining pool, the BTC is paid out proportionally, based on the hashrate you contribute.
In theory, a single used miner is sufficient for this. The untouched and KYC-free coins are paid for in Germany with a hefty surcharge. Because the electricity prices in this country usually do not allow a profitable operation of the ASICs.
Bisq, the decentralized exchange
The gold standard for the Otto-Normal-Bitcoiner is likely to be decentralized exchanges like Bisq being. Bisq is more of a network than an exchange. Since the software does not have a centralized intermediary, it can be called a Decentralized Exchange, or DEX for short.
At Bisq there are various ways to get in touch with other peers and thus to enter into deals with other network participants completely independently of centralized order book algorithms. Anyone who chooses to exchange for cash by post, for example, can be sure of their anonymity. Bitcoin trading on Bisq is not entirely risk-free. Despite the mandatory security deposit, it is conceivable that the other party will run away with the money and not release the BTC.
As a rule, however, business on Bisq goes smoothly – and just in case there are arbitators with “referees” who moderate disagreements.
HodlHodl and Localbitcoins
Exchanges work in a similar way to HodlHodl or Localbitcoins.com. It is true that these cannot be called DEX in the strict sense of the word, as they do not process the trades automatically. But similar to Bisq, traders also enter into a peer-to-peer relationship with their counterparty. Localbitcoins in particular has made a name for itself in countries with little financial inclusion, as Bitcoin can also be purchased there for cash. So even people who do not have a bank account can invest in Bitcoin. It is therefore not surprising that around 10 percent of the traffic on Localbitcoins is in Venezuela.
Nigeria is also very popular: with a trade volume of $ 182 million, Nigeria accounts for the second largest share of trade volume at the time of writing.
If Bitcoin is actually to become money, everyone must have access. This is ensured by decentralized solutions such as Bisq or Localbitcoins. But even in this country there can be legitimate reasons to turn your back on conventional exchanges – for reasons of data protection, for example.
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Buy Bitcoin without KYC: Here’s how