Buying KYC-Free Bitcoin FAQ
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Buying KYC-Free Bitcoin FAQ

Your questions answered regarding buying bitcoin without providing KYC info.
Buying KYC-Free Bitcoin FAQ

What is "KYC-free bitcoin"?

KYC-free bitcoin is bitcoin bought, mined, or earned without providing a government issued ID which ties you to your purchase of bitcoin. KYC exchanges store your information indefinitely and by-law, which could someday be used against you. Buying KYC-free bitcoin allows you to selectively reveal information to the selling party, instead of being forced to reveal everything to anyone with access.

Why should I buy bitcoin without providing KYC info?

Since KYC data is stored on exchanges forever, it creates a risk that the data may someday be leaked, as seen with exchange leaks from Gemini, Swan, Unchained Capital, NYDIG, Swan (again), and BlockFi, Coinmama. These can be cross-referenced with other leaks like the Ledger customer data leak and the Celsius customer database to expose your potential holdings and physical location, a dangerous combination. Governments may turn against bitcoin buyers and they have access to a list of who bought, how frequently, and how much. Buying without providing KYC info alleviates these risks.

What information do I have to reveal when buying KYC-free?

This can depend on the chosen payment method. Some payment methods only reveal your name and phone number to the other party, others like a bank transfer would reveal your name, account number, and routing number. Cash is best for complete anonymity, either in-person or by-mail. Check out the list of payment methods on Bisq at the end of this article to learn more about each one. This is useful even if you don't use Bisq for buying.

How do I DCA KYC-free bitcoin?

The equivalent to the most automated way of "DCAing" KYC-free bitcoin would be to mine it at home. The Antminer S9 is very affordable (<$200 shipped with power supply is a common deal) and there are plenty of resources on how to get started with that particular miner. It's also possible to place buy orders on popular KYC-free exchanges like Bisq and HodlHodl that help with buying at specific times but in a less-automated way.

Do I need a new wallet for KYC-free bitcoin?

It's likely safest in the long run to completely segregate your bitcoin bought with KYC from your bitcoin bought withouth KYC. Depending on the software wallet you use, you may be able to easily do this without buying a new hardware wallet. For example, Sparrow Wallet allows you to create multiple wallets, which use different derivation paths or accounts, with the same hardware wallet. Using a different passphrase is also useful for segregating funds with the same physical signing device, since doing so will use a completely separate set of addresses.

What if there's no P2P liquidity where I'm from?

This is an unfortunate reality in some places, and is only resolved by there being more demand for P2P trades. You can post buy orders above the market price and wait, but that doesn't guarantee someone will take your order. What helps is when more people do this, signalling demand for a serious market. Using a service like Revolut can also provide you access to the global market.

What is the premium for buying KYC-free bitcoin?

When buying from ATMs or vouchers, the vendor may put a fee on top of the price of bitcoin that you're purchasing, and this can depend on the individual vendor. However, when buying bitcoin from another peer directly, that is the true market price of what someone is willing to accept for parting with their bitcoin. Consider instead that KYC exchanges are giving you a discount to buy bitcoin for your personal info.

If I'm already KYCed from before, what does it matter?

It matters because you can stop adding to the amount that they (either the government or future potential bad guys that get a hold of the data) know about. Even better if you can sell that bitcoin back through the exchange for USD, then use that to buy bitcoin without providing your KYC info. That way at least you'd be KYCed for 0 bitcoin.

What if I use a stablecoin or Strike to "pay" "myself" "KYC-free"?

You should avoid having to perform KYC for any service that's Bitcoin or crypto-related. Using these services, even if not to buy bitcoin directly, signals your interest in Bitcoin, and puts you in a smaller pool of users for targeting.

Don't I already have to KYC for my bank?

Doing a KYC process for your bank or similar general financial services (non-bitcoin/crypto-related) account doesn't signal your interest or intent to purchase and hold bitcoin. You're in the same pool of customers as everyone else which use that service which means you're using the tactic of hiding in a crowd. If you want to avoid all forms of KYC, cash is your best option for purchasing bitcoin.

If I buy bitcoin which someone else KYCed for, is it still KYCed?

The KYC applies to the customer, not the coin. If you purchase bitcoin without providing your own KYC info to the seller, that bitcoin is KYC-free to you, since its purchase is not tied to your ID. It doesn't matter if the seller performed KYC to buy it in the first place.

Can't I still be identified by timing financial application payments with bitcoin transactions?

It should absolutely be considered possible with state-level resources. However, you would likely already be individually targeted in the first place. If this is part of your threat model, you should avoid all financial application payment methods to buy KYC-free and instead use ATMs, mining, and cash-by-mail to purchase bitcoin.

What if I buy bitcoin from a Fed?

For now, buying bitcoin without KYC is legal, but if you want to take the highest level of precaution, you should use a payment method that allows you to remain anonymous and without having to meet in person, which is cash by mail. The danger here grows from creating a pattern, which allows a single entity to determine the amount of bitcoin you hold.

If bitcoin ownership were ever made illegal, could a seller tell on me?

Using payment methods that only share a minimum amount of information, like a name and phone number, help, but they could still be used to identify you if you're dealing with a focused adversary. The best payment method to preserve the highest amount of privacy is cash by mail.

How can you spend bitcoin obtained without KYC?

If you want to avoid anyone knowing about your bitcoin ownership, you should use a privacy-preserving wallet like Samourai Wallet, which in addition to providing the best implementation of coinjoins (Whirlpool), also provides post-mix spending tools to retain privacy. If using Lightning Network, which has good spender privacy, be cautious about your on-chain UTXOs when opening and closing channels.

What if the receiver blocks UTXOs bought P2P or that have been coinjoined?

The only entities to be known for blocking these types of transactions are exchanges, which require KYC in the first place. However, in case more entities start doing this, there are still tools like Ricochet that can be used to get around them. This is also a good case for Lightning Network, but again, be cautious about the on-chain privacy aspect, and never receive to your node. More info on Lightning privacy is available here.

If I withdraw from a KYC exchange, I own the bitcoin. What can they do about it?

Withdrawing doesn't undo the KYC in the first place. The KYC is on you, the customer, not the coin. Your data is still sitting in the exchange's database acting like a honeypot for hackers to try to steal, or for your government to someday use against you, like in a 6102-style attack.

What is a 6102-style attack?

A 6102-style attack is one where owning or having self custody of bitcoin is illegal. Likely, the government would buy KYCed bitcoin at a discounted rate, similar to what EO6102 did with gold. The major difference though is the amount of information available on all KYCed bitcoin owners today, than individual gold owners in 1933.

Would the government really come and try to take my bitcoin?

They probably won't need to go to everyone's residence. It's more likely they would require individuals to turn in their bitcoin voluntarily, then send notices to those that didn't. Since they know exactly how much each KYC buyer has bought, they'll know if anyone comes short, and will require proof of sale (and taxes paid) if they don't have it.

Isn't it just as easy to confiscate KYC-free bitcoin?

It isn't, because to find out if someone has bought bitcoin without KYC would require them to be individually targeted. Then it's still difficult to determine how much bitcoin that individual has, since there are different methods for obtaining KYC-free bitcoin. All KYC buyers have their ownership and amounts known, making them the easiest target for a confiscation plan.

Why couldn't I just buy KYC then leave the country?

You could, but you'd need to (a) be familiar with the laws pertaining to renouncing your citizenship, and (b) get out before any crackdowns start. The USA, for example has an "Expatriation Tax" (exit tax) when renouncing citizenship and may apply to you.

What if I "lost it in a boating accident"?

If you claim to have lost your bitcoin and a 6102-style attack happens against bitcoin ownership, expect to be treated as in contempt of court until you break (see Tommy Thompson, still held in jail since 2015). Additionally, if you claim it was stolen, expect that they'll want a police report filed documenting the theft at the time it happened.

Can't I just withdraw then send it to another, non-KYCed, address?

All KYC exchanges partner with a chain analysis company to watch your on-chain transactions. The two main issues with this are (1) will you report that transfer as a sale, and (2) if you ever mess up and consolidate UTXOs in the future, they have you. If you don't do (1), they have you as well.

Can't I just withdraw then coinjoin it?

No matter what you do on-chain, and coinjoin is a great way to regain your forward facing privacy, the KYC record still exists tying your info to an amount of bitcoin ownership. Nothing can undo the KYC because it's a record on you, not the coin.

What if the government never does anything bad towards KYC buyers?

Then you still avoided having your name, address, ID, and other information put in a database associated with your bitcoin purchases which could be hacked or leaked at any time. Even if you don't feel a threat from government crackdowns, KYC exchanges are honeypots of data.

Bitcoin is speech and can't be banned, why should I bother?

If the thesis of Bitcoin's "separating money and state" is correct, governments will go to unheard of and likely unreasonable lengths to keep the current system going. There has already been talking points around this in the form of "unhosted wallets" related to self custody.

Can I buy anything large with KYC-free bitcoin?

You can, especially if you find a seller willing to take payment in bitcoin directly, even a house. That way you're not relying on any middleman or trusted third party to complete the payment. You can also still report your sale of bitcoin to your tax agency if you so choose, even if bought P2P, the cost basis is on you to calculate.

What are some more resources for learning about KYC-free bitcoin?

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