How to Buy Bitcoin Anonymously

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Created in 2008, Bitcoin changed the financial world through unprecedented technology and decentralization. One of the major advantages of Bitcoin is the ability to purchase anonymously. However, not all methods of purchasing are anonymous. Learn more about how to buy Bitcoin anonymously now.

How to Obtain Bitcoin

There are 4 main ways to purchase Bitcoin, including mining, sign up bonuses, and cryptocurrency platforms:

Bitcoin Mining

Bitcoin operates using a proof of work consensus model. This means you can use computing power to help contribute to the Bitcoin network and earn rewards. You contribute to the network by verifying the legitimacy of other transactions on the blockchain. 

Block rewards are given proportionately to the amount of computing power contributed. For Bitcoin, a block reward of 6.25 BTC is given every 10 minutes. The largest issue with mining is the barrier for entry. 

Most Bitcoin mining computers are very expensive, ranging from $1,000 to upwards of $20,000. There are also large companies that make profit from solely mining Bitcoin. This can make it hard for smaller miners to earn rewards. 

Earning

There are several ways to earn Bitcoin. One is to use a lending platform. Crypto.com and Gemini offer lending platforms and pay rewards for lending Bitcoin. 

To begin earning on a lending platform, you must have Bitcoin to lend. You can then give your funds to the exchange and they will facilitate the lending. Exchanges will pay you Bitcoin rewards for giving them Bitcoin to lend. This is similar to how a bank pays interest on your savings to lend the money to borrowers.

Another way to earn crypto is through referral programs and sign up bonuses. Coinbase offers a referral program in which you can earn $10 in BTC for each referred user. SoFi, an investment platform that provides crypto, stocks and many other investment vehicles, is currently offering $10 in Bitcoin to anyone who creates an account with SoFi. 

Lastly, some employers offer Bitcoin as a form of payment. The list includes large companies such as GMO Internet. If your employer does not currently offer Bitcoin as a form of payment, it may be worth exploring this possibility. If you are a freelancer or independent contractor, Bitcoin payment may be negotiated.

Cryptocurrency Exchanges

If you already own a cryptocurrency that is not Bitcoin, you can exchange it for Bitcoin. There are many exchanges that support Bitcoin exchange, but Uniswap and Coinbase are among the best. To exchange for Bitcoin, you first need a cryptocurrency wallet. 

A cryptocurrency wallet is a decentralized way for individuals to hold sole ownership of assets. Wallets can be in the form of software (such as Coinbase Wallet or MetaMask) or hardware (such as Trezor or Ledger). 

Software wallets tend to be easier to use while hardware wallets offer more security. Once you have your crypto in a wallet, you can connect it to an exchange. Once it is connected, navigate to swap and select the pair of BTC and the currency you already own. Execute the swap, and you should have BTC in your wallet.

Cryptocurrency Brokerages

Buying cryptocurrency directly is arguably the easiest way to obtain Bitcoin. The most popular way is from a crypto brokerage, such as eToro, SoFi or Webull. These sites allow you to fund your account with ACH or wire transfers. 

From there, you can directly purchase Bitcoin. However, crypto brokerages often abide by know your customer (KYC) laws and are required to have personal information of all users. To anonymously purchase Bitcoin, you’ll need to buy Bitcoin in person. 

How to Buy Bitcoin Anonymously in Person

Bitcoin ATMs are a great way to anonymously purchase Bitcoin in person. Bitcoin ATMs differ from traditional ATMs in that they send transactions across the blockchain and into a wallet. Similar to an exchange, you will need a wallet and wallet address to use a Bitcoin ATM. 

First, locate a Bitcoin ATM. Once you find a Bitcoin ATM close to you, select the buy or sell option and then use a phone number or email address for 2-factor authentication. You can then either use a QR code or manually enter in your wallet address. Then insert the amount of cash you would like to deposit into your Bitcoin wallet. You will get a receipt, and the Bitcoin should be in your wallet shortly. 

Another way to buy Bitcoin is from another person directly with cash or electronic payment. This way of buying Bitcoin would involve a meet up where you would pay someone cash, and they would send BTC to your wallet. This option helps avoid costly fees that ATMs can charge. However, you do face risk of safety and scams. 

How to Buy Bitcoin Safely

The main concern with safety and Bitcoin purchases is theft. For both ATMs and exchanges with another person in cash, there is a risk of your money being stolen. This could be a result of someone stealing your money at the ATM or the stranger you are meeting with taking your money and not sending the Bitcoin. 

For an in person meet up, it is best to let others know where you are going and who you are meeting. It is also important to ensure that you receive the BTC.

Another tip for buying BTC safely is to do research. The Bitcoin ecosystem can become very complex, so it is good to have an understanding of what you are going to be doing. Benzinga has guides for mining, swapping on an exchange and buying Bitcoin from a crypto brokerage. 

Why Buy Bitcoin Anonymously?

There are several reasons you may want to buy Bitcoin anonymously. For starters, there are security risks with Bitcoin transactions that are not anonymous. Major crypto brokerages have been hacked, which lead to millions of dollars of crypto lost. It is very unlikely that anonymously bought crypto will be stolen. 

Another reason for anonymous Bitcoin transactions is that some do not want their financial records to be viewable. This is applicable for those who work in the securities industry who are limited in what assets they buy, as well as those who generally wish to retain privacy. 

Lastly, Know Your Customer (KYC) laws cause brokerages to require lots of personal information. This can include a social security number and driver’s license. In the age of the internet, it may be risky to send important documents around. It can also be tedious if you simply want to trade crypto. 

While crypto brokerages require KYC verification, it is still one of the fastest methods to buy Bitcoin. It will also help track taxes, automatically sending an 8949 form, the tax form for cryptocurrency gains and losses. 

While there are a variety of different crypto brokerages, a few in particular stand out due to low fees, ease of use and a focus on education Coinbase, eToro, SoFi, Robinhood and Webull are among the best cryptocurrency trading platforms. While it may be a bit tedious to sign up for an account, it may be worth it for the ease of crypto purchases. SoFi, Robinhood and Webull also double as stock exchanges. This can allow you to consolidate your finances into a single app.

Anonymous Bitcoin Transactions: Why and How

There are many reasons to buy Bitcoin anonymously. For both safety and privacy concerns, it may be worth utilizing the anonymity Bitcoin provides. There are also several methods to obtain Bitcoin, ranging from mining to direct purchase. If you are interested in keeping up with the latest Bitcoin and cryptocurrency news, make sure to return to Benzinga often for the most current news.