Anonymity vs. KYC: The Pros and Cons of Cryptocurrency Exchanges

[Potato Chips]

A lot of people actually trade on discord, facebook, telegram, etc. without or a with a filmsy “escrow”.

I don't have any social media accounts, but from the number of reports on here, Reddit, and Twitter of people who have been scammed on social media, I would steer well away from using them to trade unless either you already know and trust the person you are trading with, or you are using a mutually agreed on reputable escrow. There have been plenty of such reports of scammers suggesting an escrow, and the escrow was working with the scammer all along. Pick one of the reputable escrows from this forum.

There is also the currency exchange board on this forum.

I think I phrased it poorly. I meant to say try to invite them over in one of the mentioned no-kyc p2p exchanges. I've been to a couple of local communities myself and none of the people I've talked to knows localcryptos, etc. (this was way before LC's shutdown). We have good no-kyc exchanges right now however a lot of people still have not heard of its existence but everyone knows social media - i guess i should not be surprised lots of people trade there.

In future, I believe there will be less platforms with non-KYC services.

Perhaps this is just my faith in the community but I imagine people would still pursue developing/maintaining alternatives to kyc'd platforms since restrictions drove people to such ideas in the first place. I think there'd be lesser no-kyc exchanges in the future as well however, when it comes to this, quality outweighs quantity.

[1715057695]

1715057695

[1715057695]

1715057695

[1715057695]

1715057695

[1715057695]

1715057695

[Lanatsa]

Honestly: I really don't believe in P2P trading, I can't find a trusted person in my local area to do P2P transactions.

Where have you looked? Try some of the exchanges listed here: https://kycnot.me/. In particular, Bisq, AgoraDesk, and RoboSats are the best at the present time. And if there isn't someone in your local area, you can still trade via bank transfer with people further afield.

If ever the known no-kyc p2p exchanges returned no results. I say try hitting some social networking platforms as well and see if it’s possible to invite someone over. A lot of people actually trade on discord, facebook, telegram, etc. without or a with a filmsy “escrow”. These people most likely don’t know there are better alternatives to do p2p that’s why they settle for such…

Or people cant really just afford on doing so or really that much afraid.Its true that there are other ways or paths on doing p2p but since the most common way would really be on those known exchange platforms
then this is where they would really be sticking into that belief and principle which would lead no choice but to make out some verification before they could unlocked up such feature.

In some key areas which its not really that necessary since there are methods or ways but people would really be surrendering out their identity for the convenience
and easy access on using up platforms which i couldnt really blame them out.

[o_e_l_e_o]

I think I phrased it poorly. I meant to say try to invite them over in one of the mentioned no-kyc p2p exchanges. I've been to a couple of local communities myself and none of the people I've talked to knows localcryptos, etc. (this was way before LC's shutdown). We have good no-kyc exchanges right now however a lot of people still have not heard of its existence but everyone knows social media - i guess i should not be surprised lots of people trade there.

That's a good suggestion, but I would also caution anyone on the receiving end of such a proposal. If someone approaches you on social media and says "Hey, sign up for this site and we can trade there", be very careful that you are not being scammed. Not only with an entirely fake exchange, but also with a fake site mimicking a real exchange. If you are in any doubt, ask on this forum first.

In some key areas which its not really that necessary since there are methods or ways but people would really be surrendering out their identity for the convenience and easy access on using up platforms which i couldnt really blame them out.

Which doesn't really make sense, though. If you want to trade peer to peer, then you can pick a platform like Binance, which requires KYC, requires giving up custody of your coins to Binance's central wallet, has zero privacy, has zero security, can leak your data at any time, and can freeze your account and seize your coins at any time. Or you can pick a platform like Bisq, which requires no KYC, has maximum privacy, has no risk of data being leaked, your coins remain under your control, and they cannot freeze or seize anything. I cannot see a single reason you would choose Binance (or any other centralized not-really-peer-to-peer-at-all platform).

[John Abraham]

I have discussed this in another thread as well. I believe Bitcoiner does not like KYC and wants to maintain its privacy and anonymity. Due to the requirements of KYC, a lot of people can't get into crypto. If you look at Coinmarketcap Stats,



Look at the 24H trading volume of Bitcoin. The difference between DEX and CEX will amuse you.

I believe there are a lot of ways to set users' security without asking for a KYC. Still, Exchanges ask their users for a KYC if they want to use their platform. We already compromising our privacy. Look at the stats and you will understand what's happening. I would suggest avoiding KYC Exchanges while I have already KYCed myself on an Exchange.

[jokers10]

...
I believe there are a lot of ways to set users' security without asking for a KYC. Still, Exchanges ask their users for a KYC if they want to use their platform. We already compromising our privacy. Look at the stats and you will understand what's happening. I would suggest avoiding KYC Exchanges while I have already KYCed myself on an Exchange.

It is usually not for users' security, it is for exchange's security. They don't want to have problems with government and try to follow all possible rules preventively. So if any problems they'll just pass the problem on to the user and that's all. And when they lose their databases with personal information of users they will just apologize and give you a discount certificate... or even will not do even that. So KYC is insecure for users much more than it can do for money safety, IMO.

[darewaller]

If ever the known no-kyc p2p exchanges returned no results. I say try hitting some social networking platforms as well and see if it’s possible to invite someone over. A lot of people actually trade on discord, facebook, telegram, etc. without or a with a filmsy “escrow”. These people most likely don’t know there are better alternatives to do p2p that’s why they settle for such…

Or people cant really just afford on doing so or really that much afraid.Its true that there are other ways or paths on doing p2p but since the most common way would really be on those known exchange platforms
then this is where they would really be sticking into that belief and principle which would lead no choice but to make out some verification before they could unlocked up such feature.

In some key areas which its not really that necessary since there are methods or ways but people would really be surrendering out their identity for the convenience
and easy access on using up platforms which i couldnt really blame them out.

Being afraid to get scammed might be their number one reason on why they don't use any p2p sites. I doubt those people will go for some alternatives mentioned by @Potato Chips especially telegram because we know that there are so many scammers lurking on this platform.

There are so many people who use social media sites like Facebook and twitter but there are so many fake profile here, unless if the person that they will transact with show some solid proof that they are legit. Using a centralized exchange and then doing the kyc verification is not what you call convenient but it was kind of hassle however if this was the only way to do a safer transaction then why not?

[goaldigger]

...
I believe there are a lot of ways to set users' security without asking for a KYC. Still, Exchanges ask their users for a KYC if they want to use their platform. We already compromising our privacy. Look at the stats and you will understand what's happening. I would suggest avoiding KYC Exchanges while I have already KYCed myself on an Exchange.

It is usually not for users' security, it is for exchange's security. They don't want to have problems with government and try to follow all possible rules preventively. So if any problems they'll just pass the problem on to the user and that's all. And when they lose their databases with personal information of users they will just apologize and give you a discount certificate... or even will not do even that. So KYC is insecure for users much more than it can do for money safety, IMO.

This is definitely for the safety of the exchanges not to be questioned by the government and since they are following the rules of AMLA, they left with no choice but to follow it. Now if the users is not ok with this, then better to choose DEX which i think can be more safe if your concern is more about your security. KYC have a pros and cons, its really prone to a data breach at any site and seriously, I know my information are already compromised by just having my facebook and google account.  

[John Abraham]

...
I believe there are a lot of ways to set users' security without asking for a KYC. Still, Exchanges ask their users for a KYC if they want to use their platform. We already compromising our privacy. Look at the stats and you will understand what's happening. I would suggest avoiding KYC Exchanges while I have already KYCed myself on an Exchange.

It is usually not for users' security, it is for the exchange's security. They don't want to have problems with the government and try to follow all possible rules preventively. So if any problems they'll just pass the problem on to the user and that's all. And when they lose their databases with the personal information of users they will just apologize and give you a discount certificate... or even will not do even that. So KYC is insecure for users much more than it can do for money safety, IMO.

I was talking about users' security because, in this thread, someone said you may know who are you dealing with. If anyone tries to scam you, you can ask the exchanges to investigate and find out who was. If users are already done KYC on exchanges, they won't try to scam on P2P Transaction. I already compromised my Privacy on an exchange and all users of this exchange must be KYCed. Still, I was a target of scammers twice. They sent me a fake payment message and luckily I checked my balance before I release my Bitcoin. I reported them and the Exchange blocked that scammer.

I understand what you have said. If they want to do business, they have to listen to the government. Still, we do that because somehow we need a service. I do not know any non-KYC service where I can buy and sell Bitcoin with my locals.

[MusaPk]

I have discussed this in another thread as well. I believe Bitcoiner does not like KYC and wants to maintain its privacy and anonymity. Due to the requirements of KYC, a lot of people can't get into crypto. If you look at Coinmarketcap Stats,



Look at the 24H trading volume of Bitcoin. The difference between DEX and CEX will amuse you.

I believe there are a lot of ways to set users' security without asking for a KYC. Still, Exchanges ask their users for a KYC if they want to use their platform. We already compromising our privacy. Look at the stats and you will understand what's happening. I would suggest avoiding KYC Exchanges while I have already KYCed myself on an Exchange.

Bitcoin was designed to be pseudonymous. There is no concept of KYC in bitcoin designed by satoshi back in 2009. The KYC just destroyed the concept of decentralized peer to peer cash transfer. For me, centralised exchanges that do KYC are not part of decentralized cryptocurrency. Rather, they are just like traditional banks that control your money.

[jokers10]

...
I know my information are already compromised by just having my facebook and google account.  

Of course it is, but when you lose your car keys it doesn't mean that losing house keys will not be hurting for you anymore. Maximizing of compromised personal info is IMO always not a good idea. Of course sometimes we have no option of escaping that but if we have then I prefer to use it.

...
If anyone tries to scam you, you can ask the exchanges to investigate and find out who was.
...

And we face up with a difference between old financial system and bitcoin again. If you need to trust a third party which will be an intermediary then old system works even better, but it also controls your money and can decide if you can operate them. Bitcoin returns control over your money but you take on the risks involved. It is a choice bitcoin gave us. And it is impossible to have both: to trust money to a third party and to keep full control over them.

...
I do not know any non-KYC service where I can buy and sell Bitcoin with my locals.

Sorry to hear that.

[John Abraham]

Bitcoin returns control over your money but you take on the risks involved. It is a choice bitcoin gave us. And it is impossible to have both: to trust money to a third party and to keep full control over them.

FYI, I do not hold my coins on exchanges. When I need to buy or sell with my locals, I make a deposit there and do the trade. Still, we gave exchanges control over our coins. Sometimes when you reset your password or change your email, Exchanges disable withdrawals for 24 Hours for security reasons. But, I liked the idea, to be honest. This is not what we do every day. So, it won't harm. Unfortunately, we had to trust a third party here because of a fewer options available.

...
I do not know any non-KYC service where I can buy and sell Bitcoin with my locals.

Sorry to hear that.

This is the only reason we had to trust those third-party Centralized Exchanges. I wish I had options where I can trade with my locals without a KYC.

[pawanjain]

It is difficult to stay completely anonymous in the current generation where each and every device, app, website is tracking us in some way or the other.
There are people who prefer to stay anonymous and use anti-trackers to stay away from being tracked.
Talking about me, I try to stay as anonymous as possible if at some point I have to give up anonymity in order to get ease of access and convenience then I do give it up.
For example using binance to get access to a larger volume of coins for trading. I do give anonymity in such cases.

[@sriyan]

Hey everyone, I wanted to start a discussion around the topic of anonymity and KYC (know your customer) requirements in cryptocurrency exchanges. As we all know, there are exchanges that require extensive KYC verification, while others operate with little to no verification process.

On one hand, KYC can help prevent fraud, money laundering, and other illegal activities. It can also provide a sense of security and transparency for users who want to know who they're trading with and ensure that their funds are safe.

However, KYC can also compromise anonymity and privacy, which are often highly valued by cryptocurrency users. Some argue that the need for KYC goes against the decentralized and borderless nature of cryptocurrencies, and can even put users at risk of data breaches and identity theft.

So, what are your thoughts on exchanges with and without KYC? Do you prefer exchanges with strict KYC requirements, or do you value anonymity and privacy more and prefer to use exchanges with little to no verification process? What are the disadvantages and advantages of each approach? And what measures do you take to ensure your anonymity when exchanging cryptocurrencies?

Let's have an open and respectful discussion around this topic and hear everyone's perspectives. Looking forward to your input!


List of KYC data breaches.

My suggestion is to implement a hybrid method (to a certain amount) to handle both the KYC and the Anonymity. If it KYC perspective, there will be a lot of advantages to users as well. it can stop third-party scams. Also, in order to enhance fund security, maybe it's time to introduce a Know Your Exchange mechanism which provides information like reserves, liabilities, etc. of an exchange.

[Synchronice]

I think that for average person, crypto exchange that asks for KYC and is regulated is a better choice but there is another problem and I can't figure out why is that problem ignored by governments.
Let's discuss about Binance, an exchange that asks for KYC and knows its customers. It's China based, right? It asks for KYC documents to its worldwide users and it has millions of active members. Isn't this a concern for USA, UK, Germany, France ? Why is it okay for every country to just ignore the fact that foreign companies ask KYC to their citizens? Why doesn't for example USA gets offended when China-based exchange collects identity documents of your citizens?

I think that governments need exclusive permission in business in this case. For example, every Italian person that registers on Binance should be manually approved by government agencies on behalf of Binance and Binance should never have access on citizens information, I mean to copy and move data and view of that info should be permitted in only certain cases.

[pixie85]

It is difficult to stay completely anonymous in the current generation where each and every device, app, website is tracking us in some way or the other.
There are people who prefer to stay anonymous and use anti-trackers to stay away from being tracked.
Talking about me, I try to stay as anonymous as possible if at some point I have to give up anonymity in order to get ease of access and convenience then I do give it up.
For example using binance to get access to a larger volume of coins for trading. I do give anonymity in such cases.

Apps are tracking you but they can only track everything. They have only the data that you give them.

When you go to a store and pay with bitcoin all they have is date and time of the transaction and the address that was used. They don't have your name and address, your date of birth, they don't even know if you're a man or a woman.

That's where the harm of KYC comes into play.

They force you to give them that information so that it can get associated with your wallet and your wallet with your online activity. Suddenly they know that your coins came from a signature campaign, they know your forum nickname, post history. You post about a hardware wallet that you use, you give them other exchanges that you have account on because you post about it on the forum.

KYC is worse than a tracking app.

[milewilda]

My suggestion is to implement a hybrid method (to a certain amount) to handle both the KYC and the Anonymity. If it KYC perspective, there will be a lot of advantages to users as well. it can stop third-party scams. Also, in order to enhance fund security, maybe it's time to introduce a Know Your Exchange mechanism which provides information like reserves, liabilities, etc. of an exchange.

Proof of reserves? It wont really be necessary since their main neither hot or cold wallets could really be determined or could be known out in speaking with these exchangers which they wont really be reaching out that
particular popularity or recognition if the masses cant be able to do so since everything could really be seen publicly.It is really just that a matter of things when it comes to your choices whether you are
really that able to deal up with the current set-up where these platforms are already that imposing those KYC.We know that there are still platforms offers no kyc which you could make use of their
services but there are really things which you do leave no choice but to comply or verify out specially if you are really that in make use of P2P which i could say that
it is really important for me.

[samcrypto]

It is difficult to stay completely anonymous in the current generation where each and every device, app, website is tracking us in some way or the other.
There are people who prefer to stay anonymous and use anti-trackers to stay away from being tracked.
Talking about me, I try to stay as anonymous as possible if at some point I have to give up anonymity in order to get ease of access and convenience then I do give it up.
For example using binance to get access to a larger volume of coins for trading. I do give anonymity in such cases.

There’s a lot of ways for them to get access on our personal details, some site are selling it on a black market and that’s normal nowadays, if you stay anonymous you should not open any account on any social media because there’s already an issue like this from them. Anyway, CEX are following the order from their regulations or else they will not be allowed to operate. The only problem here is that some CEX are not too honest about the safety of our details, especially what happened to FTX where KYC is required, for sure its also compromise.

[jokers10]

FYI, I do not hold my coins on exchanges. When I need to buy or sell with my locals, I make a deposit there and do the trade. Still, we gave exchanges control over our coins. Sometimes when you reset your password or change your email, Exchanges disable withdrawals for 24 Hours for security reasons. But, I liked the idea, to be honest. This is not what we do every day. So, it won't harm. Unfortunately, we had to trust a third party here because of a fewer options available.
...

What I don't like in this situation is that I deprived of choice if I want such a "security" service or not. They make me trust my personal data to them even if I don't really trust them. Of course we can talk that banks don't ask us too, but bitcoin is the alternative and I don't want involving a bank practice while using crypto. If I want such service I can easily use banks directly with all old fiat system (and of course I use it because bitcoin payments are not spread enough yet). And of course I understand that sometimes if you need exchanging bitcoin you are just deprived of choice of not using service with KYC. I expect there will be fewer such problems with wider spreading of bitcoin.

[michellee]

It is difficult to stay completely anonymous in the current generation where each and every device, app, website is tracking us in some way or the other.
There are people who prefer to stay anonymous and use anti-trackers to stay away from being tracked.
Talking about me, I try to stay as anonymous as possible if at some point I have to give up anonymity in order to get ease of access and convenience then I do give it up.
For example using binance to get access to a larger volume of coins for trading. I do give anonymity in such cases.

There’s a lot of ways for them to get access on our personal details, some site are selling it on a black market and that’s normal nowadays, if you stay anonymous you should not open any account on any social media because there’s already an issue like this from them. Anyway, CEX are following the order from their regulations or else they will not be allowed to operate. The only problem here is that some CEX are not too honest about the safety of our details, especially what happened to FTX where KYC is required, for sure its also compromise.

The black market will be a destination for people who want to get personal data because it is a place to sell and buy confidential data from every website user. That is a risk that everyone who does KYC must face, but every website that asks its users to do it will be very careful and protect their confidential data.

If someone does not want his personal data to be distributed by irresponsible people, he does not need to enter the original data. Still, now it is difficult because the user will be asked to send his documents to the site. And if someone really wants to avoid this, he doesn't need to use the internet for business or related to finance because later there will be regulations that ask him to do KYC.

[OpenCEX]

Many crypto exchanges require KYC only if a user needs to make transactions in fiat currencies. Where fiat deposits are involved, anonymity isn’t possible from the source of deposits (payment systems or bank cards).