The promise of cryptocurrency meant a promise of anonymity and a way to be the boss of your own money. Decentralization was the idea many have taken so fast and so quick that crypto blew up as it did.
But there are side effects to this as well. Being the people we are, whenever we get a chance to skate by and to hide something, we always use the opportunity to the fullest. Crypto offered just that to many out there who had money on their hands that needed hiding, to shady persons doing shady deals and to a lot of other bad people that wanted to pay or withdraw cash for their illegal services, without anyone knowing about it.
But there is one common misconception that most of these guys overlooked. When it comes to Bitcoin, everyone thought that it would be anonymous, but the fact is that this crypto is what you call pseudonymous. Yes, there isn’t a name and a surname attached to your every transaction but whenever you pay with Bitcoin or receive a payment you need to create a public key or address on a public blockchain. When you create something on the blockchain it remains there forever, it just takes a little hard work to get a hold of you.
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Now, let’s get on with the topic at hand. As we mentioned Bitcoin is pseudonymous and if you want to pay or receive payment in this crypto you need to make a digital address which means that you will have to leave a digital fingerprint on the blockchain. We discussed this plenty of times now, and you probably already know that a blockchain is your public ledger. Anything you do there is recorded and publicly available to anyone who knows what they are looking for and how to look for that. Thanks to this fact many of the people that wanted to stay anonymous when using crypto jumped to other coins that offered more layers of protection and that offered special encryptions and trading places where you can truly be invisible to the prying eyes.
Most of these coins are still available to buy, hold, trade but some of them had to lower their encryptions and become a bit more open because problematic cases like terrorism financing, drug trafficking payouts and whatnot, have been paid for in this way. Thanks to a lot of bad guys trying to utilize the power of anonymity and the power of decentralization, crypto had to implement a couple of things that have to fight bad things happening on the blockchain.
The things we have in mind, and that most of you probably know by now are KYC and AML protocols. These two protocols were put in place so selling and obtaining Bitcoin or other cryptos, anonymously gets a bit more difficult and it might put away some of the bad people, or those with bad intentions away from this. These protocols have been implemented in several big exchanges like Coinbase and Kraken.
Let us elaborate a bit on these protocols so you understand what exactly do they do and why it is so hard to buy or sell Bitcoin when these are active.
KYC or Know Your Customer and AML or Anti Money Laundering are government protocols that have been issued to crypto exchanges where they need to gather information about individuals so the government can prevent illegal activities like tax evasion and money laundering, amongst other things that bad people have though along the way. Each of these protocols stands for something or rather combats something. KYC is there to verify that you are who you say you are and that no false accounts, false names, addresses or any other information have been used to create a fake account so you can do shady things. AML on the other hand is a bit stricter protocol, or rather a set that is supposed to fight any attempt of money laundering, identity frauds, funding terrorist organizations and many other bad things we see are happening in the world.
These protocols do protect the world from bad things, that no one can deny, but since most of us have jumped on the crypto train for the ability to remain anonymous, to benefit the decentralization, we feel violated by these protocols because they violate the ability that was promised to us.
We do live in a world that is full of paradoxes and somehow, we always manage to find a way to live it so. It does sound really funny when you hope for something that offers everything that cryptocurrency, blockchain and decentralization do, and sometime later you have protocols on power, that restrict that. Many people protested this and that gave up on crypto in total but some understand the necessity for these. The people who accepted this as is continued using and trading as nothing happened, and those are the people who never had ill attention in the first place. Most others that protested this tried to find other ways to stay anonymous and continue to utilize the benefits of crypto. The way you can do this as well is to find an exchange that does not have these protocols in use. As of now only the biggest and most famous exchanges, with the most traffic uses these protocols. With every day there are new ones that pop up and you can probably try to buy and sell your Bitcoins there and remain anonymous.
The only thing we will have to advise is to research every exchange at least a bit to make sure they are somewhat legitimate. There were a couple of issues with other exchanges when this whole crypto deal started and we wouldn’t want anything to happen to you or your Bitcoins as well.
Do a bit of research, ask around, read up and inform yourself before making a transition from one exchange to another. Sometimes keeping your anonymity may end up costing you more than you imagined, so stay vigilant.