Isn’t KYC anti-ethical to Bitcoin?

[Luke Briggs]

Although Bitcoin is anonymous, it is not completely anonymous. Others can know your assets through your address. But KYC also has advantages. Some people like this setting.

[suryogandul]

When i first heard about bitcoin, one of the selling points then was the pseudo anonymity. But as of recently, it is hard to purchase any crypto without encountering a form of KYC.

I’m just curious of everyone’s thought on this.

the implementation of the KYC system is actually aimed at the positive side and the security of the members. because many issues of crime and crypto abuse caused the exchange to implement a KYC system.
when choosing a large exchange you don't need to hesitate to do KYC there because your privacy is definitely maintained and security for your assets can be optimal

[rodskee]

Although Bitcoin is anonymous, it is not completely anonymous. Others can know your assets through your address. But KYC also has advantages. Some people like this setting.

even if you wanted or not there are chances that KYC will be needed , when you are using exchange of in gambling site or even in some places where you need to purchase there is KYC obligatory so yes this is part of crypto and no one can escape the idea of Being expose not unless you are completely into Holding for long years.
and yes crypto is not completely anonymous so accept that fact because this is still more secrecy than banking.

For me, I think that KYC isn't that bad at all, I mean not a lot of people care too much about bitcoin so I really don't see how it's going to be a problem plus with KYC, we can easily dispel the argument that bitcoin funds terrorist due to it's anonymity which isn't true since there's already a KYC.

at some part this is for our own safety so engage in kyc or leave crypto that's all you have to decide right?

[realcrypto]

Pseudo anonymity was the vision Satoshi Nakamoto having in mind when developing bitcoin but people in the crypto space do not live in isolation and the exchange as well, we all stay in a society where our Government still wants to regulate us and the exchanges.  For the exchanges to successfully operate they need their costumers to undergo KYC so that the Government will allow them to operate.

[o_e_l_e_o]

the implementation of the KYC system is actually aimed at the positive side and the security of the members.

How is risking your identity being stolen and becoming liable for thousands of dollars in loans and credit you didn't take out or having your identity used for money laundering in any way good for your security?

when choosing a large exchange you don't need to hesitate to do KYC there because your privacy is definitely maintained and security for your assets can be optimal

Lol. This couldn't be more wrong. Every large exchange has had both customer information and customer assets stolen, hacked, leaked, or sold. You have zero privacy and zero security with a centralized exchange, regardless of how large they are.

at some part this is for our own safety so engage in kyc or leave crypto that's all you have to decide right?

It is absolutely not for you own safety, and you have been brainwashed if you truly believe that. It is clearly for government surveillance purposes and centralized exchanges comply so they can continue to exist and make profits. Imagine telling people to leave crypto for trying to use it for what it was designed - peer to peer without any intermediaries.

[Yogee]

....
because many issues of crime and crypto abuse caused the exchange to implement a KYC system.

No it's not about the crime or abuse but it's about the profit. Exchanges probably would not care who uses their platform as long as they gain something from those transactions. It was only after regulators mandating strict measures against money laundering that they started implementing KYC. They have to follow or they will be forced to shutdown.

[AicecreaME]

When i first heard about bitcoin, one of the selling points then was the pseudo anonymity. But as of recently, it is hard to purchase any crypto without encountering a form of KYC.

I’m just curious of everyone’s thought on this.

Bitcoin originally has the redeeming quality of anonymity, however, as time passes by, anonymity isn't really much prioritized by the users most especially the newbies who are only after profit. This is because before even entering crypto, they are used to central organizations that require KYC to be able to use their platform. In addition, to some users, it isn't really much of a big deal even for those who are pioneers in the crypto world. I think it really just boils down to the matter of preferences. There are people who know the risks of KYC, yet they still choose to do it because they have no other choice, otherwise they will not be able to utilize the platform because they will not be verified if they won't undergo such. There are also people who know the risks but don't really mind as long as they benefit. There are also people who just basically go with the flow. The reasons for each one differs and that's totally okay as long as they know they are responsible for whatever will happen to their funds for signing up to such.

There are still exchangers that don't require KYC but there are only a few of them left because of legality issues such as avoiding AMLA and obeying the local government. Anyone could opt to do whatever they think would make their account secure and more convenient while being used because we're all entitled to that. After all, we are not really being forced to undergo such. We still have choices and it just depends on us whether we will prioritize convenience or safeness.

[m2017]

When i first heard about bitcoin, one of the selling points then was the pseudo anonymity. But as of recently, it is hard to purchase any crypto without encountering a form of KYC.

I’m just curious of everyone’s thought on this.

Even being forced to do KYC and sending your documents to purchase bitcoin, you can still achieve a pseudo anonymity when buying products.

Let's suppose you bought 10k USD in bitcoin in Coinbase, and you sent your documents there and withdrawal those funds to the address A.

You can just send your coins to a bitcoin mixer (address B), and then the mixer will send you back other coins  (which are not linked to your coins from address B) from address C to your address D.

This way you can achieve some anonymity.

Is it theoretically possible to untangle this chain?   address A-B-C-D and so on.

[o_e_l_e_o]

Is it theoretically possible to untangle this chain?   address A-B-C-D and so on.

It depends both on what mixer you use, and how you use the mixer.

First of all, there are a number of mixers which have been proven to be breakable. There is a great write up about this here: https://bitcointalk.org/index.php?topic=5117328.0. The only mixer that user was not able to break was ChipMixer, since they use a unique mixing process when compared to all other mixers.

Secondly, it also depends on how you use the mixer. If you deposit a unique amount of bitcoin to the mixer, let's say 1.376 BTC, and then you immediately withdraw the exact same amount of coins. Someone could reasonably assume those two transactions are linked. If you send your mixed coins back to an address you've already used, or you combine your mixed coins with unmixed coins somewhere down the line, or you send your mixed coins to somewhere you've completed KYC, and so on, then you can completely negate all the benefits the mixer brings. You can also leak information in other ways, such as using custodial wallets or SPV wallets, via your IP address, and so on.

Best practice when using a mixer is to deposit a set amount of coins, and then slowly withdraw different amounts at different times to different places, and make sure you never link mixed and unmixed coins together. Do this over Tor. Run your own node or use a wallet such as Wasabi which protects your privacy.

[Pmalek]

KYC was never meant to be a part of Bitcoin, but then again, satoshi wasn't talking about Taproot, SegWit, or the Lightning Network either. It's the userbase that decides how Bitcoin will proceed. And the users clearly don't mind using centralized exchanges and payment providers where you exchange your coins for fiat. Whenever fiat is involved, you can expect KYC and AML regulations to be respected.

I don't see it as unethical if you know about the requirement from the beginning. If an exchange requires that you verify your identity, you can either do it, or you can try your luck with a DEX that doesn't request that. In reality, most people will just to what the CEX says and provide them with the info they ask for.

An example of unethical behavior would be an exchange being advertised as not having KYC requirements, but once you deposit some money into it, they ask you to undergo KYC and explain the source of the funds. If the majority of bitcoin users said NO to KYC, CEXs wouldn't hold such a significant position in the whole crypto economy and they would be forced to change their practices. Unfortunately, that won't happen.       

[bitmover]

Let's suppose you bought 10k USD in bitcoin in Coinbase, and you sent your documents there and withdrawal those funds to the address A.

You can just send your coins to a bitcoin mixer (address B), and then the mixer will send you back other coins  (which are not linked to your coins from address B) from address C to your address D.

This way you can achieve some anonymity.

Is it theoretically possible to untangle this chain?   address A-B-C-D and so on.
[/quote]

For common users, if you have a low amount (not thousands of btc) you can get "clean " coins, not attached to you.

You can send 2 Btc to a mixer, For example, and receive several small amount of 0.02 or 0.05 btc, which were never linked to those 2 btc you had. Those small chips come from other addresses,  those are other coins. Then  they are not linked to you.
As o_e_l_e_o said, large amount make jt Harder to mix and someone may break it easier.

[fillippone]

KYC Is anti-ethical to bitcoin and harmful to your own privacy, one of the many things whose value you appreciate only when it is gone, probably forever, as it is very difficult to gain it back.

Long time ago, I translated in Italian a good long post by the Italian fellow bitcoiner Giacomo Zucco on this subject.

Have a read here:
A Treatise on Bitcoin and Privacy

[SteveHankse]

Yes, it is true that traders need to verify KYC before trading with crypto exchanges. And it is a mandatory step implemented by most of the crypto exchanges. I think safety is the concern here. With these centralised exchanges, your bitcoins are somewhat protected and less prone to attacks and scams.

[dimonstration]

Yes, it is true that traders need to verify KYC before trading with crypto exchanges. And it is a mandatory step implemented by most of the crypto exchanges. I think safety is the concern here. With these centralised exchanges, your bitcoins are somewhat protected and less prone to attacks and scams.

Attacks and scams is your least concern when you are pertaining for KYC requirements from exchange. This is strictly implemented so that Exchange can trace you in case you deposit money from illegal transaction. Same scenario when the time hacker of a Dapps exploit the pool funds and hacker deposit all the hacked money on a centralized exchange which result for revealing his identity and locked the exchange account. Due to many illegal activity in crypto, Regulators imposed KYC on exchange to still regulate it despite crypto being decentralized in a sense.

[Kakmakr]

In the early days when Bitcoin and other Crypto currencies were still illegal in most countries, hardcore supporters of Crypto currencies believed that it was crucial to protect their Crypto identity to stay Pseudo anonymous to hide from these governments.

We should also note that Fiat (Cash) is also Pseudo anonymous, so it is not something extraordinary that are only applicable to Crypto currencies. We (Crypto community) are only asking to get the same level of Pseudo anonymity, as people using Fiat (Cash) ..but the third parties are the ones destroying people's Pseudo anonymity. 

[Slow death]

I think there is a serious flaw in this KYC issue, the flaw is as follows:

if we look at KYC we realize that only customers deliver documents to anonymous sites with anonymous owners and it is not known if our documents will be safe or not. this flaw hurts customers

[KaliLinux]

When i first heard about bitcoin, one of the selling points then was the pseudo anonymity. But as of recently, it is hard to purchase any crypto without encountering a form of KYC.

I’m just curious of everyone’s thought on this.

What do you mean by "anti-enthical"?Can you elaborate more on this term?
KYC regulations apply to all financial services.Which government regulations are "ethical" and which are "anti-enthical"?The law is what it is and we have to follow the rules,even though some of rules are BS.
KYC is required when you open a bank account or a forex trading account in fiat currency.
We all want the crypto industry to be viewed by the government as a legit and legal industry.
If we want mass crypto adoption and legalization,this is the price we have to pay.
If you are complaining about not being anonymous,then why don't you use you a privacy coin like Monero.

Just my point as well. I know there are a lot of their places as you have also mentioned that we do KYCs and they don't have a problem with does so why is KYC for Bitcoin a problem if we are not trying to continuously make it look illegal. I personally don't have any problem doing KYC plus everyone has their own opinion about this and I believe that is why some people still see it as something they don't want to invest in.

[o_e_l_e_o]

With these centralised exchanges, your bitcoins are somewhat protected and less prone to attacks and scams.

Centralized exchanges have been responsible for the vast majority of stolen bitcoin and stolen data over the years. They are provably the most risky place to leave your coins.

I know there are a lot of their places as you have also mentioned that we do KYCs and they don't have a problem with does so why is KYC for Bitcoin a problem if we are not trying to continuously make it look illegal.

Once again, refusing KYC and/or wanting to maintain some financial privacy does not mean you are doing anything illegal. Believing that privacy is a crime is buying in to government propaganda used to create surveillance states.

Lots of people don't make a fuss with KYC in the fiat sector because it is impossible to interact with the fiat sector without KYC. You cannot open a bank account, take out a loan, or obtain any sort of credit, without completing KYC. You cannot work most jobs without having a KYC-ed bank account in which to receive your pay. We don't like it, but it is necessary if you want to use fiat. However, none of this is necessary with bitcoin. You can open a wallet, buy/sell/trade bitcoin, earn bitcoin, hold bitcoin, spend bitcoin, swap bitcoin, do anything at all you want with bitcoin without ever completing KYC. KYC is completely unnecessary and is being forced upon us by governments which want to spy on you and track your behavior.

[stepwilli]

I think there is a serious flaw in this KYC issue, the flaw is as follows:

if we look at KYC we realize that only customers deliver documents to anonymous sites with anonymous owners and it is not known if our documents will be safe or not. this flaw hurts customers

Uuhm, anonymous sites with anonymous owners? A truly centralized exchanges doesn’t have anonymous owners, when you go to their website you would see a page where they display the team that are working in the exchange. You can take Coinbase as an example, they are not hiding anything about their team and their location, they list their top team members and also their CEO so that you get to know them, and also where their office is located.

This is also the same with other centralized exchanges and wallets that I know. Anyone that is anonymous and showing it's team, then it’s likely that they just want to steak your information.

[topbitcoin]

When i first heard about bitcoin, one of the selling points then was the pseudo anonymity. But as of recently, it is hard to purchase any crypto without encountering a form of KYC.

I’m just curious of everyone’s thought on this.

Bitcoin ifself is anonymous, but centralized exchange are not. They need legalization to keep opened because there are a rules from their government. I think we user don't have much other options beside use decentralized exchange, or maybe P2P, so i think if people don't like to do KYC, they still can buy or sell their coins as long they use trustful decentralized exchanges.