When using fiat currencies, you can’t invest in Bitcoin without undergoing KYC (Know Your Client) verification. This is because centralized exchanges mandate users to do the KYC identity verification process before using fiat currency to invest in Bitcoin. However, you may ask, how then can you invest in Bitcoin and remain anonymous using a centralized exchange?’
Luckily, there is another way to invest in Bitcoin without fiat currency. While staying anonymous with fiat currency is impossible, some centralized exchanges allow you to hide your identity when performing crypto-to-crypto exchanges.
In the following sections, we will expand on this and talk about exchanges that support anonymous transactions, the differences between centralized and decentralized exchanges, and privacy coins, which are altcoins that also provide transaction privacy.
Anonymous Investment in Bitcoin Using Centralized Exchanges (CEXs)
Know Your Client (KYC) verification is a set of standards used in the finance sector to verify customers’ identities and risk profiles. The customer or user must provide certain documents, primarily a government ID. Banking systems must follow KYC and anti-money laundering laws (AML), and since fiat currency is the official legal tender, exchanges must also abide by these regulations.
Hence, exchanging crypto for fiat anonymously on a reputable centralized exchange is impossible. So, how else can you invest in Bitcoin and remain anonymous using a centralized exchange?
Exchanging crypto for crypto is currently the only way to maintain privacy while investing. Since KYC laws are not mandatory for cryptocurrencies, some centralized exchanges don’t require verification, allowing you to perform anonymous transactions. However, you must note that most centralized exchanges don’t permit users to transact without identity verification. Hence, you have limited options.
But don’t worry. In this article, we will discuss the top five centralized exchanges that allow you to invest without identity verification.
Tips for Investing in Bitcoin
Before you invest in Bitcoin, you must have at least a basic knowledge of cryptocurrencies and how to invest in them. Doing so will help you make informed decisions and ensure you make a profit from your investment.
So, before we talk about crypto exchanges, let us quickly run through seven valuable tips to guide you when investing.
1. Understand Your Risk Tolerance
Cryptocurrency is well known for its high volatility, making it more risky than other financial assets. So, before you join the Bitcoin investor wagon, assess your risk tolerance level. Are you willing to take much risk? If the risk is more than you can handle, you should explore other options.
2. Diversify Your Portfolio
Putting your eggs in one basket is risky because if it fails, you lose everything. That’s why diversifying your portfolio is a safer way to invest. Thus, it’s better not to pour all your money into Bitcoin investments. Instead, mix your portfolio by adding low—to medium-risk assets like other high-potential cryptocurrencies, government bonds, real estate, and stocks.
3. Start Small
You may be unsure if investing in Bitcoin is a great idea. If so, you can take it slow. Don’t go all in. Instead, start small by investing small amounts regularly and letting them accumulate over time. It’s like taking baby steps. Soon, they will add up to larger steps, and you may even gain enough confidence to take one giant stride at once.
4. Use a Secure Wallet
When storing your Bitcoin, choose wallets with good reputations to avoid security threats or the risk of losing access to your cryptocurrency. You should also consider a hardware wallet, the safest storage option. A hardware wallet is a great idea for storing your coins over a long period.
5. Hold Bitcoin over a Long Term
Another great tip is to hold your Bitcoin investment for the long term. Being the first cryptocurrency, Bitcoin has become a mainstay digital asset, making it less risky than other cryptocurrencies.
BTC recently hit the $70,000 mark in March, and analysts have predicted it will reach an all-time high of $100,000 after the highly anticipated Bitcoin halving event. So, hodling Bitcoin is an excellent idea, as the value will keep appreciating over time.
Hodl is a misspelling of Hold, which has become an investment philosophy that means ‘Hold on for dear life.’ It involves holding on to your investment without selling despite price volatility.
Hodling is the best strategy for new investors who don’t know how to leverage temporary price fluctuations. It helps them avoid making losses during volatile periods. With hodling, you just keep holding onto your investment without selling it off. In the long run, it has higher prospects of amassing substantial interest.
6. Stay Informed about New Developments
Always keep up with the latest news and developments in the cryptocurrency market.
However, you must not let every piece of news shape your actions. Check analysis and be careful to make well-calculated decisions.
7. Be Prepared for Market Volatility
Always be prepared for Bitcoin price volatility, even if you are hodling. Short-term price movements will always occur, so don’t let them push you into making impulsive decisions. Instead, stick to your long-term investment plan.
4 Centralized Exchanges to Invest in Bitcoin Anonymously
If you are still wondering, ‘Can you invest in Bitcoin and remain anonymous using a centralized exchange?’ Yes, you can! All you need to do is find a suitable centralized exchange that supports anonymous transactions.
Here’s a list of five centralized exchanges where you can invest without KYC:
- PlasBit
- Pionex
- CoinEx
- MEXC
1. PlasBit
How can you invest in Bitcoin and remain anonymous using a centralized exchange? With PlasBit, you can perform crypto-to-crypto exchanges without KYC, making the process fast and straightforward. They respect your right to privacy, so they support anonymous transactions. The exchange never discloses personal information to any third-party authority. Instead, keep your information secure.
Unlike other exchanges, it provides 24/7 personal customer service in real-time, ensuring that users get all the support they need. The user-friendly exchange also has a real company registered in Poland with the necessary crypto exchange license. If problems arise, our professional customer service team will pay full attention to you to find a solution and give you the best experience.
PlasBit takes responsibility for protecting customers’ funds. They store clients’ assets in cold storage insurance, separate from the company’s fund, ensuring they are protected against physical damage and third-party theft.
2. Pionex
Pionex is a popular Singapore-based centralized exchange that boasts over 100 million users and availability in 100 countries and regions.
The platform facilitates automated trading with 16 trading bots. It currently supports 379 coins for exchange, providing a wide range of options for users.
Unlike other CEXs on this list, Pionex uses KYC. However there are two levels of KYC which are unverified, Level 1, and Level 2.
At the unverified level, you cannot perform any trading activities. The level 1 only requires your full name and country of residence. It offers a daily limit of 20,000 BTC. The level 2 requires your government-issued ID and facial recognition, upgrading your limit to 1,000,000.
3. CoinEx
CoinEx or CoinExchange is a centralized crypto exchange based in Hong Kong that permits investors to engage in spot and futures trading without KYC. You can also invest anonymously in margin trading, yield farming, and idle coin staking.
CoinEx supports over 600 cryptocurrencies and charges 0.1% as its starting fee for both makers and takers. However, you can get lower costs if you hold its native token, the CoinEx token (CET).
However, you can only withdraw $10,000 worth of crypto in 24 hours without KYC verification. If you want a higher limit, you must verify your identity. All you need to access CoinEx without KYC is an email address, a strong password, and two-factor authentication.
4. MEXC
MEXC is a popular centralized exchange platform with over 10 million users. It offers over 1700 tokens and 2600 pairs and localized support to over 170 countries and regions.
MEXC allows users to access spot trading and futures trading without KYC. MEXC offers spot trading at 0% marker and taker fees, while future trading attracts a 0.02% taker fee and no marker fee.
However, MEXC is not a true KYC CEX as it offers a tier KYC system. It has three tiers: unverified, primary KYC, and advanced KYC. At the unverified tier, you can use the platform without any verification. You only need your email address. There is also a 24-hour withdrawal limit of 30 BTC.
If you want to increase the limit to 80 BTC, you must go through the primary KYC process, which gives you limited access to P2P trading. However, you can also increase your withdrawal limit to 200 BTC when you complete a verification.
Centralized and Decentralized Exchanges
There are two types of exchanges available: centralized and decentralized. Let’s dive in to learn more about both forms of exchange and consider their differences.
What are Centralized Crypto Exchanges?
Centralized crypto exchanges (CEXs) are the oldest and most popular exchanges. They are trading platforms controlled by a central authority that acts as intermediaries between buyers and sellers.
Using CEXs is a safe way to invest in Bitcoin. However, can you invest in Bitcoin and remain anonymous using a centralized exchange? Definitely! With centralized exchanges that don’t require KYC, you can anonymously invest in Bitcoin. Here’s how CEXs work:
The centralized exchange holds the user’s funds during the negotiation until the buyer and seller have been matched.
Centralized exchanges play active roles in facilitating the exchange process. Usually, users must create an account, deposit funds, and place orders. Then, the exchange will do the rest of the work as the middleman. Some popular centralized exchanges are Binance, Kraken, and Coinbase.
Advantages of Centralized Crypto Exchanges:
- CEXs offer user-friendly interfaces that make it easy for beginners and professionals to navigate the platform.
- There is a wide range of trading pairs, giving users more options to choose from.
- Centralized exchanges have access to a larger pool of traders, allowing them to offer high liquidity and trading volumes.
Disadvantages of Centralized Crypto Exchanges:
- One major downside to centralized exchanges is the lack of control over private keys. You can’t access the private key since the exchange controls the exchange process.
- The lack of control by users can lead to security risks, as CEXs have been the target of hackers.
- They may charge relatively higher transaction fees than decentralized exchanges.
What are Decentralized Exchanges?
Decentralized exchanges (DEXs) are crypto exchanges without a central authority. Instead, they leverage blockchain technology and smart contracts, allowing direct trading between buyers and sellers.
DEXs use a peer-to-peer approach that gives users direct control over the transaction process. Instead of using intermediaries, you only need to connect your wallet to the exchange.
Some popular decentralized exchanges are Uniswap, Sushiswap, and dYdX.
Advantages of Decentralized Crypto Exchanges:
- Users interact directly with the smart contract, eliminating intermediaries. So, you have direct control of the private key.
- They offer increased security since users control the private keys and funds. This reduces the chances of hacking.
- DEXs have lower trading fees since there is no intermediary.
Disadvantages of Decentralized Crypto Exchanges:
- Although they offer lower trading fees, they may still require gas fees.
- Decentralized exchanges have a smaller user base, which means their trading volume and liquidity are lower than centralized exchanges. This could lead to higher exchange rates for buyers.
- DEXs are more complex than CEXs, so you must have some prior understanding of blockchain technology before using them. Hence, they are less beginner-friendly.
- Decentralized exchanges don’t have stringent regulatory rules, which can breed illegal activities such as money laundering.
- They offer limited customer support.
Centralized vs. Decentralized Exchanges for Crypto-to-crypto Exchange
While intermediaries control centralized exchanges, decentralized exchanges support direct interaction with the smart contract. However, DEXs pose several challenges for crypto-to-crypto exchange.
One major challenge is low liquidity and fewer trading pairs, which means there are fewer buyers and sellers. This will lead to market volatility, which can cause frequent price hikes and slippage. Low liquidity can also lead to insufficient gas fees, hampering smooth transaction processes.
Another issue with decentralized exchanges is the slower transaction speed due to network congestion and blockchain confirmation. Beginners who have little knowledge of smart contracts may also experience technical difficulties when navigating the platform.
Hence, centralized exchanges are the better option for faster and smoother transactions as they have high liquidity, many digital assets, and are simple to use.
If you are worried about KYC issues with centralized exchanges, several CEXs don’t require KYC, allowing you to invest in Bitcoin anonymously.
Crypto-to-Crypto Exchange vs. Crypto-to-Fiat Exchange
Crypto-to-crypto exchange offers several benefits to crypto investors. With this option, investors can diversify their cryptocurrency portfolio by swapping one token for another.
Traders can also take advantage of short-term price movements to make gains or, on the other hand, mitigate against price fluctuations associated with a particular cryptocurrency.
Although exchanging cryptocurrency for fiat currency may offer higher liquidity, there are several reasons why crypto-to-crypto exchange is a better option, including:
- Privacy: At the top of this list is that with crypto-to-crypto exchanges, you can evade identity verifications if you want to stay anonymous. However, you must verify your identity when doing crypto-to-fiat exchanges.
- Lower Fees: Crypto-to-crypto exchanges often have lower transaction costs than cashing out with fiat currency.
- Access to a Wider Range of Assets: Exchanging crypto for crypto gives you access to a broader range of cryptocurrencies than swapping crypto for fiat, which gives you access to a more limited range of options.
- Transaction Speed: Converting crypto-to-crypto is usually faster than crypto-to-fiat because the transaction processes are fewer.
What are Privacy Coins?
Privacy coins conceal the details of cryptocurrency transactions to protect the user’s right to privacy. Thus, details like identity and account balance will be hidden, making it difficult to trace such transactions when investing in crypto.
These coins offer another way to anonymously invest as they hide your identity, ensuring that there is no breach of privacy.
Although privacy coins enhance anonymity, they are not totally untraceable. Investigators may still be able to track their movement using advanced technologies.
Most cryptocurrency exchanges that support privacy coins may also require users to do an initial verification, but subsequent transactions will be anonymous.
The primary purpose of these coins is to support the privacy of users who would rather stay anonymous. However, people can also use them for illegal activities like money laundering.
Thus, some countries have banned them to curb money laundering. Such countries include South Korea, Australia, Japan, and Dubai.
In most countries where they are not banned, privacy coins have not been outrightly endorsed, leaving a gray area around their use. Some cryptocurrency exchanges have also delisted privacy coins to avoid regulatory complications that may arise due to increased scrutiny.
How Do Privacy Coins Work?
Privacy coins use various techniques to conceal users’ identities and transaction details. The most common methods are stealth addresses, Zk-SNARKs, and ring signatures.
- Stealth Addresses: Stealth addresses involve creating new, temporary addresses whenever you want to make a cryptocurrency transaction. This way, no one can trace the receiver’s identity.
- Zk-SNARKs: Zk-SNARKs stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. In this method, you use zero-knowledge cryptography to prove the validity of a transaction without exposing its details.
- Ring Signatures: This technique involves creating a ring of users, each with their keys, to make it challenging to know which user’s key generated the signature.
The Top Five Privacy Coins
Are you looking for the best privacy coins? Here are our top picks:
- Monero (XRM):
Available Exchanges: KuCoin, TradeOgre, MEXC, Kraken, Bitfinex, CoinEx, and CoinDCX.
Ranked as the best privacy coin, Monero uses ring signatures, stealth addresses, and confidential transactions to hide the identity of the sender, receiver, and other transaction details.
- ZCash (ZEC)
Available Exchanges: Binance, Coinbase, Bitfinex, Kraken, Poloniex, Bittrex
Zcash (ZEC) is one of the most popular privacy coins, allowing you to control your privacy level. It uses Zk-SNARKs zero-knowledge proof to encrypt transaction details. ZCash is the first widespread application of Zk-SNARKs.
- Dash (DASH)
Available Exchanges: Binance, Coinbase, Bitfinex, Kraken, DigiFinex, Bittrex, KuCoin, and CEX.IO
Dash (DASH) uses a unique feature called Conjoin. Conjoin is a fungibility feature that mixes other anonymous people on the network, making it challenging to detect where the coins came from. Dash also provides users with fast and efficient transactions.
- Decred (DCR)
Available Exchanges: OkX, Binance, MEXC, KuCoin, CoinDCX, Bybit, CoinW.
Decred (DCR) combines privacy-enhancing features with community-driven governance, making it one of the best user-friendly privacy coins. It enhances privacy using a lightning network, Conjoin, and Coinshuffle.
- MobileCoin (MOB)
Available Exchanges: Pionex, Finance, Bitrue, Gate.io, CoinEx, DigiFinex
MobileCoin (MOB) is a privacy-centric coin that offers fast, secure, and encrypted transactions. It uses advanced cryptographic methods like Zk-Snarks and ring signatures to ensure users’ privacy.
Conclusion
So, can you invest in Bitcoin and remain anonymous using a centralized exchange? You can invest in Bitcoin anonymously to maintain privacy. Although it doesn’t work for crypto-to-fiat exchanges, some centralized exchanges (CEXs) allow you to exchange crypto for crypto without using KYC. These CEXs include PlasBit, MEXC, CoinEx, TradeOrge, and Bybit.
PlasBit ranks at the top of our list because it offers an easy and safe way to exchange crypto-to-crypto anonymously. With advanced security features, including two-factor authentication, the exchange ensures the safety of your assets and information.
You also don’t have to go through the rigorous process of verifying your identity. With easy steps, you can enjoy fast and anonymous transactions. PlasBit offers comprehensive customer support in real time to help beginners and professionals navigate the platform and get answers to their questions and concerns. Now, you can start investing in Bitcoin anonymously to make money by leveraging PlasBit CEX.