Why, where and how to buy cryptocurrencies without ID verification.
Generally, you have to verify your identity to buy bitcoin (BTC) and other cryptocurrencies freely in Canada.
However, if you’re looking for almost completely anonymous transactions, that’s also possible.
The downside is that anonymity comes at a price. Buying bitcoin anonymously will often come at about 5-10% extra cost.
Buy bitcoin without ID verification on these exchanges
Why do I have to verify my identity?
This is due to the anti-money laundering and counter-terrorism financing (AML/CTF Act), which requires financial services to perform their research on customers. These are broadly known as Know Your Customer (KYC) obligations.
In Canada, legitimate providers who aim to build a successful business will usually try to operate in line with these requirements. However, there are still ways to buy bitcoin anonymously in Canada, as well as other cryptocurrencies.
The legitimate reasons to make anonymous transactions
Bitcoin isn’t truly anonymous. The blockchain gives a complete transaction history, which lets a diligent person find out:
- How much bitcoin is held at an address
- When bitcoin was received or transferred to or from an address
- The addresses that you are sending bitcoin to, and receiving bitcoin from
So once your personal identity can be connected to an address, someone can find out how much bitcoin you have.
If someone can attach an identity to the addresses that you’re transacting with, they can find out how much bitcoin was transferred, when it was transferred and who was sending and receiving it.
Why would someone want to hide that? Frankly, it’s none of your business.
Someone who’s involved in illegal activities would obviously be interested in remaining anonymous, but there are also many legitimate reasons to cover your tracks.
Most importantly it can be a matter of safety. Bitcoin is valuable, and being known as someone who owns a lot of bitcoin might make someone a target. Unlike any other asset, a limitless amount of bitcoin can be stolen all at once.
There’s no limit to how much can be stolen all at once, and no authority to halt a suspicious transfer. Sometimes anonymity might be the safe and smart choice.
Other than that, individuals might simply prefer to keep their finances private for other reasons. Maybe they don’t want their family to come asking for money; maybe they just don’t trust the government or the banks.
4 ways to buy bitcoin anonymously
Buying anonymously will generally never be as easy as simply verifying your identity. Depending on the method, you might have to jump through more hoops, or pay further above market value for the bitcoin you buy. However, here are 4 approaches to consider:
- Local peer-to-peer trading
- Use a bitcoin ATM in Canada
- Buy bitcoin with a prepaid credit card
- Trade other altcoins for bitcoin
Local peer-to-peer trading
This involves selling or buying bitcoin (or another altcoin) to or from someone in your area, or further afield.
You can find buyers and sellers with a platform like LocalBitcoins. Buyers and sellers list their prices like any other exchange, but it lets you find locals to trade with.
There’s no verification required, and dealing directly with other buyers or sellers lets you sort out payment methods between yourselves.
For example, you might agree to buy bitcoin in cash, meet a seller at a local cafe and do the transaction.
Remember to take all sensible precautions when buying or selling bitcoin face-to-face. Meet in a crowded public place, and try to avoid doing business with someone you aren’t comfortable with.
In particular, be wary of offers that seem too good to be true. There are a lot of buyers and sellers, so there’s no real reason for anyone to go too far above or below market price.
Using a bitcoin ATM in Canada
Imagine simply depositing cash into an ATM, providing your wallet address on the machine and then having the equivalent bitcoin deposited to your specified account.
There are currently 410 bitcoin ATMs in Canada. Look for them in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, PEI, Nova Scotia and Newfoundland.
Note that the actual anonymity you get with a bitcoin ATM may vary between machines and locations. For example, the owners of some machines might ask you to verify your identity, or there might be cameras at some machines, but not others.
Buy bitcoin with a prepaid credit card or cash, without verification
Some exchanges and services will let you load up an account with a prepaid credit card, similar to a Visa gift card you can buy at a supermarket or convenience store without verifying your identity.
For example, Coinmama lets you buy bitcoin with a prepaid credit card, or by cash with a Western Union transfer. However, your purchase limit might be capped at a low amount, such as $150, if you don’t verify your identity.
Trading other altcoins for bitcoin
You can often trade without verifying your identity if you’re sticking to cryptocurrencies only, and not handling any fiat currencies.
Many exchanges, such as Changelly, let you trade cryptocurrencies with other users without verifying your identity.
Alternatively, so-called “shifting” services let you trade altcoins with yourself, to avoid losing as much value to commissions and varying exchange rates while covering your tracks.
The hard part of staying anonymous while turning CAD into bitcoin this way might be acquiring the initial cryptocurrencies. However, once you have, this method can “put some distance’ between your identity and the address that actually holds your funds.
For example, you might use a verified account to purchase CAD$1,100 of Ethereum (ETH), and then trade that for $1,000 of bitcoin (BTC) in a different address. Now your verified address, which is attached to your identity, will be a step removed from the address that’s holding your bitcoin.
By taking some steps to hide your transactions between your own accounts, you can move funds away from your verified accounts and into more anonymous ones.
How to hide your bitcoin transactions
If there’s one simple way to vastly boost your privacy, it’s by changing your address for each transaction, and avoiding static addresses.
Your ability to do this largely comes down to your choice of wallet.
Other than that, you can be mindful of your footprint when using the methods above. For example, avoid giving someone your phone number when paying cash for bitcoin on a local exchange.
If you want to buy online anonymously, or are otherwise doing anything that ties you to a wallet address on a computer, you should also take steps to hide your IP address.