Bitcoin, Privacy exchanges, and KYC verification

[Antotena]

For a long time I used CEX without needing verification; the deposit and withdrawal limits were more than sufficient. In my case, the situation changed because of regulations in my country, and CEXs operating here are required to request KYC. Even so, I can choose from many others that are not required and are available to me. Not declaring BTC or any other cryptocurrency I own can lead to imprisonment and fines, so unfortunately, I have no way to avoid it. My privacy or tax evasion could be my downfall.

DEXs are great for staying in the cryptocurrency environment, exchanging one for another, but they don't offer me the possibility of exchanging for my country's local currency, which is what I need to do most of the time.

There was never use of kyc, some exchanges that are kyc compliance today never had kyc before, they were force into implementing it because they feared what will be their business if they don't follow what the government says. You can see Binance was recently forceout of Europe, it's because of government and politics. If you don't do as they say, you are going to either get pack out of the space or you will have to listen to them like they say.

If you don't have business with fiat, I don't think centralized exchanges are of any good use. There are plenty of decentralized exchanges, we have some decentralized p2p already, it's just that they don't have liquidity but some regions that are having difficulty in p2p are many in there unlike regions were Bitcoin is friendly. You are better off centralized exchanges, nobody will wake up one morning to want to lock your coins for any reason, Dexes are better by far.

[Sally9256]

There was never use of kyc, some exchanges that are kyc compliance today never had kyc before, they were force into implementing it because they feared what will be their business if they don't follow what the government says. You can see Binance was recently forceout of Europe, it's because of government and politics. If you don't do as they say, you are going to either get pack out of the space or you will have to listen to them like they say.

If you don't have business with fiat, I don't think centralized exchanges are of any good use. There are plenty of decentralized exchanges, we have some decentralized p2p already, it's just that they don't have liquidity but some regions that are having difficulty in p2p are many in there unlike regions were Bitcoin is friendly. You are better off centralized exchanges, nobody will wake up one morning to want to lock your coins for any reason, Dexes are better by far.

I think you mistakenly exchanged the word decentralized exchange with Centralized exchange which I bolded out for visibility. You should correct that so beginners don't get it wrongly. You're better off with decentralized exchanges should be more appropriate.

Other than that everything is well said, and I strongly agree that when you don't intend to make use of fiat you are better off using decentralized exchanges because of the freedom it offers. Although I wouldn't say Centralized exchanges are totally useless because they also have some advantages over Dex which has made them widely acceptable and used than most Dex. They offer more liquidity just as you've mentioned and they also offer more trading pairs which is one of the reasons many traders opt for them.

I think whatever we do we should be careful with how we make use of Cex and be careful how much we keep in it because everything you do is being watched since they comply with government rules.

[Dogedegen]

How will a Bitcoin world without the existence of centralised exchanges be like?

What if this is all we had all along?

Can anyone tell me why CZ decide to go with DEx rather, and abandoned Binance?

kYC was a bad idea after all, but we can't control what others do with their Bitcoin, I'm then wondering why this is looking like something that's possible, I believe it would have been a better world without centralised exchanges right from the start.

Tell me, have you ever DCA into Bitcoin without using Centralised exchange? Be honest.

If you want to talk about this properly then you need to separate different ideas. The first one is could Bitcoin function without centralized exchanges? The second one is how would adoption look like without them? Bitcoin works without centralized exchanges, that is the core utility of Bitcoin: It's ability to do direct P2P transactions without anyone being able to stop them. Still in reality, centralized exchanges have significantly lowered the barrier to entry for many millions of people. Without those exchanges, Bitcoin would have grown much more slowly. So you have two versions one in which adoption would be very slow compared to now but the ecosystem would have been more aligned with the original vision of P2P, and the other which is the one that we are currently in is that adoption was very fast relatively but many people do not care about P2P aspects at all. You must keep in mind that we can't have it all, we are always making trade offs between things.

When it comes to KYC, some people mistakenly blame exchanges or financial companies for it like you are now doing it with centralized exchanges. KYC is necessary because the legal requirements mandate it, if there were no legal requirements to do KYC all of these companies would avoid doing it. It costs money, it creates complexities and risk so don't blame some company just for having to follow the law.

When it comes to your question about CZ, it is incorrect to say that he has abandoned Binance. He only stepped down as CEO after a legal settlement with the US, he would have remained CEO if it wasn't for that but he is still an owner. Did you forget that? I would believe that it would only be correct to say that he abandoned it if he completely sold it and went away which is unlikely. Over the years he has shown support for decentralized finance infrastructure, but that does not mean that he is abandoning centralized exchanges altogether. They each fulfill different things and needs.

CZ didn't abandon Binance, he left because there is other CEO taking his position and after his imprisonment I assume he don't want to taint the reputation of Binance anymore.

CZ did that likely because he wanted to leave the company, let it peacefully growing next without him and any legal drama related to him, and possibly because he loves Binance a lot.

I have no idea why you make up something like this because it was all over the news why he left? He was forced to leave by the US government in his legal case, he did not leave the position of CEO because he wanted to.

[Livingleged]

Without Cexs, governments of the world would criminalize Bitcoin. That was the initial issue Bitcoin had because government had to see users as doing something criminal with it. With that in mind, Bitcoin wouldn't even be where it's today. Its growth, expansion and adoption would be stunted.

Yes it’s worth saying that CEX has actually help in Bitcoin’s growth and adoption but I find it a bit overstretched I mean the claim you made that the CEX was what stopped Government from criminalising bitcoin. What I understand was that at first the government was slow and confused about the bitcoin, they actually focused on money laundering rust and treated people running exchanges as transmitter’s ( the US FinCEN guidance in 2013 was a clear example. They didn’t go straight to banning people just from owning bitcoin it self in most countries.

What the CEX did that I mostly appreciate is the fact that they made it very easy for ordinary people to acquire bitcoin with normal money which actually brought more liquidity and increased adoption, another thing was that the was providing government with a Clear avenue to apply rules such as the KYC AML and tax. And that was what made bitcoin look more like a regulated financial asset and not like an underground cash.

why I also I don’t think it’s accurate to say that bitcoin without CEX would have been criminalise or it’s growth would have been completely stunt is because some countries like china have actually banned the use of bitcoin, yet bitcoin work effectively on the peer to peer informal network in the country, because the protocol it self doesn’t need any centralized authority or company to function.

[Btcdeybodi]

For a long time I used CEX without needing verification; the deposit and withdrawal limits were more than sufficient. In my case, the situation changed because of regulations in my country, and CEXs operating here are required to request KYC. Even so, I can choose from many others that are not required and are available to me.

There are centralized exchanges that don't need you to undergo KYC verification before making deposits and withdrawals, you can even trade crypto assets but the only time you will need to do a compulsory KYC is when you want to perform a p2p transaction.

Not declaring BTC or any other cryptocurrency I own can lead to imprisonment and fines, so unfortunately, I have no way to avoid it. My privacy or tax evasion could be my downfall.

This is serious honestly because why will a government ask you to declare your BTC and cryptocurrency holdings, and i want to know if it also includes bitcoins you stored in a self-custody wallets. Declaring one's assets such as physical assets and money you have in your country's currency is good but declaring your digital assets is something that i don't understand because it means that you have no privacy of your money at all.

DEXs are great for staying in the cryptocurrency environment, exchanging one for another, but they don't offer me the possibility of exchanging for my country's local currency, which is what I need to do most of the time.

You cannot exchange digital crypto assets to your local fiat on DEXs because they operate on-chain. The only way to perform a decentralized p2p is if you know someone from your country who buys crypto assets and send fiats directly without going through p2p platforms.

[Freeveto]

If you don't have business with fiat, I don't think centralized exchanges are of any good use. There are plenty of decentralized exchanges, we have some decentralized p2p already, it's just that they don't have liquidity but some regions that are having difficulty in p2p are many in there unlike regions were Bitcoin is friendly. You are better off centralized exchanges, nobody will wake up one morning to want to lock your coins for any reason, Dexes are better by far.

We have DEXs that can be used to buy bitcoin, you don’t need KYC to use them, and some centralized exchanges like MEXC allow you to use the exchange for some certain amount without KYC. If we can use DEX to buy Bitcoin and send to our non-custodial wallets, there is no need to share you information in form of KYC just to buy bitcoin with centralized exchanges since you are not trading or holding the bitcoin in the exchange.

[Out of mind]

Compared to CEX, there is a lot of privacy in the DEX, so many people refrain from using CEX exchanges. Basically, in DEX, the private key is completely under the control of the DEX, while in CEX exchanges, it is controlled by a third party and if the KYC is complete here, they can know their identity. Recently, CZ has been talking a lot about DEX, due to which such questions have arisen in the minds of many, which has created a lot of criticism. However, there is also a need for CEX exchange. People use P2P to complete transactions here and they use it in trading to buy and sell their bitcoins. But those who are big investors avoid them because the KYC system is disliked by them because they prefer to remain secret. Those who try to keep themselves secret avoid KYC exchanges, rather they use DEXs which provide them with security. If I personally use DCA in investing, I will do it through the exchange because I am not investing much, those who are interested in investing a lot use DEXs.

[Localhostspeed]

Tell me, have you ever DCA into Bitcoin without using Centralised exchange? Be honest.

Yes but in my country it's a bit hard thing to do and you will eventually spend extra just to get a coin not linked to your kyc,  that doesn't  mean it can't  come from a Centralised exchange depending on source.

The source I used didn't  come from a CEX but along the line I eventually switched back to using a CEX  which is much more easier to do here, can't  afford to sacrifice 5~10 bucks(which will eventually worth x2) on every DCA attempts .

My country don't care too much about Dex, they prefer cex because they were able to penetrate the country with their partnership, so it's common to see them but we never knew how hard it will strike on us it was when Binance was banned from issuing p2p transaction, almost all trades were running for safe zone where they can trade their coins and even the government enforcement were arresting some people for having Binance app on their phone.

Dexes are different and they are not that popular compare to the centralized exchanges, if many use them before the Binance and OKX exchange drama that didn't end well, we will perhaps be in better place but everything looks bad, some people were using Telegram to look for merchant to sell coins. If there was proper Dex, it will be independent and the government will not have anyone to go after.