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.

[Synchronice]

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.

Why do you think so? There weren't CEXs and Bitcoin wasn't criminalized. CEXs exist because they are very comfortable and handy to use for millions of people. Just see, you can deposit your Bitcoin and trade at any time, you can even trade futures with leverage, up to 100x or even more. Besides futures, you have lots of other options. Besides that, you can even get a crypto card, transfer your Bitcoin from trading account to your card account and pay with your card anywhere in the world (including NFC card payments, Google Pay, Apple Pay). This is extremely comfortable for many users, that's why CEXs exist and not everyone cares about privacy and anonymity (even though it sounds bad).

[MusaMohamed]

Why do you think so? There weren't CEXs and Bitcoin wasn't criminalized. CEXs exist because they are very comfortable and handy to use for millions of people. Just see, you can deposit your Bitcoin and trade at any time, you can even trade futures with leverage, up to 100x or even more. Besides futures, you have lots of other options. Besides that, you can even get a crypto card, transfer your Bitcoin from trading account to your card account and pay with your card anywhere in the world (including NFC card payments, Google Pay, Apple Pay). This is extremely comfortable for many users, that's why CEXs exist and not everyone cares about privacy and anonymity (even though it sounds bad).

Don't care about privacy and anonymity, that's just right and very common with most people. They are still favorite in using centralized exchanges because with most people, privacy and anonymity are not important things with them. There are convenience from using centralized exchanges but there are also many disadvantages, even risks whereas there are enough warnings about these risks.

Even safety of their funds, they don't care much about it until their funds are frozen with KYC requirements do complete.

Why KYC is extremely dangerous – and useless.
Reminder: do not keep your money in online accounts.
OKX frozen my account and required me to KYC with a less than $1,000 deposit

[Bitcoin_people]

I think CZ may have planned to replace sex exchanges with DEX because of their privacy. However, KYC in centralized exchanges is considered bad for privacy by many because they are very concerned about their privacy. Those who care about their privacy and want to avoid KYC are more interested in using DEX. However, we can see most of the time that most people use centralized exchanges for their convenience, it is very easy to transact. Again, many people plan long-term and do DCA from centralized exchanges, but over time, it is seen that people are more focused on CEX exchanges and they use it for convenience. And those who care about their privacy refrain from using it.

[YOSHIE]

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

That's the great thing about Bitcoin, let's just say that there is no global Bitcoin exchange, as far as I know we can still carry out Bitcoin trading activities, maybe it can be done through the peer-to-peer/P2P market, even though there is no exchange, automatically the Bitcoin main network still runs on the blockchain, The Bitcoin network has no influence on exchanges or we can also carry out transactions which are called between individuals and also DEX which is called the decentralized system that we know today, but we cannot predict the price of Bitcoin globally when Bitcoin exchanges do not exist, the point is that we can still use Bitcoin without obstacles, but in a different way.

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

I have used and often used the DCA/Dollar Cost Averaging strategy. I believe the DCA investment strategy is common, especially for those who have minimal capital, not large investors.
The current market situation, for me is very suitable to carry out the DCA strategy, For long-term investment, buy regularly regardless of the price going up and down, what's more, the current price is up only 2% and down the same way, this is the best strategy for regular Bitcoin users to get long-term profits.

[MusaMohamed]

I think CZ may have planned to replace sex exchanges with DEX because of their privacy. However, KYC in centralized exchanges is considered bad for privacy by many because they are very concerned about their privacy. Those who care about their privacy and want to avoid KYC are more interested in using DEX.

Before CZ went into jail years ago with the sue from DOJ, he tweeted that he believed in bright future of DEX, and DEX is a way to go for cryptocurrency industry and users. It's true but one important thing people usually miss, it's about founders and ownerships of DEX.

If a DEX is founded, developed by a known founder, a known team, it's very risky because that DEX can be seized, founders and teams can be arrested like how Pavel Durov, the CEO of Telegram, was arrested in France and after that as his agreement with French government, he changed Telegram policy especially user privacy.

It's similar with Web3 wallets built by CEX, I don't trust them as same as DEX built up by CEX.

[Peanutswar]

[...]
...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.

Actually there is a role too with the centralized exchange they can now swap their coins easily and to be act as a wallet for those havent made their own non custodial wallets too so its just a temporary action now also with theuse of the p2p trades its less hassle you dont need to seek from other places just to buy and sell your crypto into fiat currency and vice versa. Now not all of the people are into centralized platform the main key here is.. privacy of course. The reason created because of  to create and transact without revealing your true identity but right now people are willing to exchange this just to have a convenience.

Before I used to have stacking of crypto in the CEX but after I experienced to get a freeze of an asset to one of these platforms it gives me a sleepless night and said i will not do this again to have money stayed in there especially for a long term DCA.

[SeriouslyGiveaway]

Actually there is a role too with the centralized exchange they can now swap their coins easily and to be act as a wallet for those havent made their own non custodial wallets too so its just a temporary action now also with theuse of the p2p trades its less hassle you dont need to seek from other places just to buy and sell your crypto into fiat currency and vice versa. Now not all of the people are into centralized platform the main key here is.. privacy of course. The reason created because of  to create and transact without revealing your true identity but right now people are willing to exchange this just to have a convenience.

Centralized exchanges or marketplaces can have swap or convert feature for users who want to have something convenient and quick but with swap and convert features, userswill have to pay more service fees to the platform and likely a little bit disadvantage in price for swapping and converting.

Another thing is not good is swapping or converting on CEX can not help to have privacy or protect your privacy while with DEX (Decentralized Exchanges), people can use those exchanges without KYC, and swap with good privacy.

With Centralized exchanges, swap or convert, you use such feature or not, your account will always have risk of freeze and you can lose your fund anytime.

[sunsilk]

Most of us have bought bitcoin in centralized exchange, there's no doubt in that. That's the purpose of using centralized exchanges.

And CZ, I don't think that he totally abandoned binance. He's still got a lot of influence in its decision making like a shadow behind the CEO of it.

I think CZ may have planned to replace sex exchanges with DEX because of their privacy.

There's some excess letter you've said there. 

[Luzin]

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

Never, for the 11 years I've known Bitcoin.

I would imagine if Bitcoin didn’t exist through CEX. I think Bitcoin’s development wouldn’t be this big. There are indeed good and bad things, and we just need to follow along. Going against the government seems like it would only make us sink. So I think we just need to make the best use of whichever alternative is best. Regarding privacy and KYC, that’s legal in terms of law because CEX really needs that for company security. So legally, we wouldn’t be able to completely avoid KYC. Still thinking about staying fully anonymous would be very difficult. CMIIW

[348Judah]

Take your privacy as a responsibility and don't expect someone to help you with this. How you control the use of your asseassets its storage will determine what you will face now or later in life.

Bitcoin is best on a non-custodial wallet, and we all know this. I know some people cannot afford to do away with the use of centralized platforms like exchanges, but we must also be well informed of the consequences of relying on such platforms with our Bitcoin, because they are going to be in charge of our assets.

[SeriouslyGiveaway]

I would imagine if Bitcoin didn’t exist through CEX. I think Bitcoin’s development wouldn’t be this big. There are indeed good and bad things, and we just need to follow along. Going against the government seems like it would only make us sink. So I think we just need to make the best use of whichever alternative is best. Regarding privacy and KYC, that’s legal in terms of law because CEX really needs that for company security. So legally, we wouldn’t be able to completely avoid KYC. Still thinking about staying fully anonymous would be very difficult. CMIIW

In the past, it was easily to buy bitcoin without KYC because AML and KYC have been only applied and enforced more strictly in the last four years and around that. It's very possible to accumulate bitcoin anonymously in the past, it's just whether you value your privacy and intend to buy bitcoin anonymously in past years.

Buying bitcoin no KYC is recommended here too.
How to manage Bitcoin like a whale?

That article is quite long, and if you only want to check with no KYC buying, search with "Develop a non-KYC stash" in that article.
Exchanges with no KYC at the present.
https://kycnot.me/?categories=exchange&currency-mode=or&currencies=btc&max-kyc=0
Do double checks with https://bitlist.co/exchanges?currency=BTC

[Doll2233]

Centralized exchanges or marketplaces can have swap or convert feature for users who want to have something convenient and quick but with swap and convert features, userswill have to pay more service fees to the platform and likely a little bit disadvantage in price for swapping and converting.

Another thing is not good is swapping or converting on CEX can not help to have privacy or protect your privacy while with DEX (Decentralized Exchanges), people can use those exchanges without KYC, and swap with good privacy.

With Centralized exchanges, swap or convert, you use such feature or not, your account will always have risk of freeze and you can lose your fund anytime.

Privacy and KYC are currently serious issues for many because in this community, mostly people love to stay anonymous, and they never like to share their personal details, but without this, living is not easy, especially for people who are not well aware of decentralized exchanges. While doing swaps or exchanges, they also need some work to do, which also makes things problematic.
Just because of this, many use centralized exchanges, giving them their own details and then holding them in their wallets, which are under their control for safety. But for having use of decentralized exchanges and using them without any trouble, it needs good awareness because newbies always make mistakes and then have losses during swaps or exchanges.
Price is always a problem because this also makes things not balanced for many, but those who always prefer security and privacy love to go ahead with this option without any issue.