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So now you know how to buy your first cryptocurrencies. However, before we move to more advanced stuff, it is important that you understand that one of blockchain’s most revolutionary features it’s its decentralized nature.
The vast majority of Bitcoin and altcoin buyers will start with a conversion platform like Coinbase or directly in major exchanges like Binance or Bittrex. While reliable and credible, these institutions remain centralized, and subject to the control of the running team. Users have no control over their funds within these exchanges, and with the imposition of Know Your Customer and Anti-Money Laundering Regulations, the simple act of signing up to these platforms implies revealing your identity.
As you may know, there are a number of decentralized exchanges (DEX) operating in the market today, in which you can trade tokens anonymously, but that do not trade in FIAT (Eur/Dollar/Yen). That means that users will have to resort to centralized exchanges to exchange their FIAT for ETH or BTC before they get to the DEXs. That means every user transaction can be traced and monitored back to its initial credit card and wire transfer purchase.
For true anonymity, one must buy digital currency with cash. It might sound counterintuitive, but there are a few online platforms that allow buyers to do this, guaranteeing full anonymity. Buyers can also opt for using the existing .Bitcoin ATM Network.
We will focus on LocalBitcoins, because it has been in operation for many years, it is accessible in nearly every country in the world and remains very popular with the wider community.
As you can see, it requests no sensitive details for you to do a free account registry.
Once you are in, you will have to find a seller that will be willing to accept a cash deposit (Some accept paypal, others wire transfers). You can search for sellers in your area. Once you select the amount of Bitcoin you wish to buy, the seller will provide you with an account number. You can then go to a nearby ATM, make the deposit and bring in the receipt, that you then upload.
Once the seller receives your receipt, the arranged amount of Bitcoin will be sent to your Bitcoin web wallet on LocalBitcoins. Once you receive the funds you should immediately transfer them to a more secure location, being it your web, desktop or hardware wallet.
As you can see, buying Bitcoin with cash is actually quite easy and it guarantees that you remain anonymous in your transactions while sustaining a true peer-to-peer decentralized exchange network. However, there are some drawbacks. Buying limits can vary considerably and, as you are buying from individuals, the limits tend to be relatively low. Also, buyers normally pay a premium for buying Bitcoin in this way rather than through exchanges, which, depending on the seller, can be considerable. LocalBitcoins itself charges 1% of every transaction. That is the price of privacy.
Now, last but not least, it is imperative that you understand that there are risks involved in trading Bitcoin in this manner, as there are in any other manner. Scammers and hustlers exist where opportunity is so, before you accept a trade and even select a seller, make sure to check its user feedback score, and the track record which is available on the site, as well as always double checking the website’s url for typos or any sign of suspicious dealings.
As always, be diligent and stay safe.