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4 Ways to Buy Bitcoin Anonymously

Source: iStock/CokaPoka
  • Buying Bitcoin with Cash
  • Buying Bitcoin using an ATM
  • Using a Prepaid Card to Buy Bitcoin Online
  • Buying Bitcoin on a Decentralized Exchange Using Cash Deposits

It is a big misconception - largely propagated by mass media - that bitcoin is an anonymous digital currency. The reality is that all bitcoin transactions can be viewed on a public blockchain and are linked to publicly auditable bitcoin wallet addresses. While these addresses only contain a string of letters and no personal information about the owner of the wallet, several methods have been developed, such as bitcoin address clustering and linking wallets to IP addresses, that can help to reveal a bitcoin wallet owner’s real-world identify.

Fortunately, there are several ways you can buy bitcoin anonymously for those who prefer to keep their bitcoin purchases hidden for whatever reason.

Essentially, there are four ways you can purchase bitcoin anonymously. Namely, using cash on peer-to-peer exchanges such as LocalBitcoins, using a Bitcoin ATM and staying below the limit that does not require identification, using a prepaid card at specific online exchanges, and purchasing bitcoin on a decentralized exchange.

Buying Bitcoin with Cash

The most popular peer-to-peer bitcoin exchanges LocalBitcoins provides users with the option to make in-person purchases of bitcoin using cash.

To do so, you have to log onto LocalBitcoins.com using only an email address and a username, and then look for bitcoin offers that provide in-person cash transaction as a payment method in your local area.

Once you have found a reputable seller with several positive reviews, agree to meet at a safe public place such as a cafe or at a shopping mall. Once, the amount, price, time and date is set, you can go and buy bitcoin in person.

While this is a relatively easy and uncomplicated way to purchase bitcoin there is the viable risk of theft if you do not meet at a safe public place but also, there have been instances where LocalBitcoins traders have ended up making transactions with undercover law enforcement agents in jurisdictions where a license is required to exchange currencies including bitcoin. Hence, buying bitcoin anonymously through in-person cash transactions on peer-to-peer exchanges does carry a certain level of risk that needs to be taken into consideration.

A popular alternative to LocalBitcoins would be the Mycelium wallet’s Local Trader marketplace, which also allows you to trade bitcoin in-person in your area.

Buying Bitcoin using an ATM

Alternatively, you can also purchase bitcoin anonymously at Bitcoin ATMs. A Bitcoin ATM functions effectively in the same way as a cash machine from your local bank, except that you can buy (and at some ATMs also sell) bitcoin in exchange for fiat currency.

Most Bitcoin ATMs allow users to purchase bitcoin without ID verification under a certain amount. Usually, this amount is around USD 750. That means you can simply go to a Bitcoin ATM in your city and purchase bitcoin anonymously at an ATM using your mobile bitcoin wallet.

To keep your transaction as private as possible, it would be recommended to also use a mobile wallet that does not require anything more than an email address to use. In fact, most mobile bitcoin wallets will only require an email address to set up and use.

The issue with buying bitcoin using Bitcoin ATMs is that it is very difficult to purchase a large amount of bitcoin in one go as you will have to use the ATM several times due to the USD 750 I.D. limit. This means if you want to buy a substantial amount of bitcoin you will also be carrying a substantial amount of cash on your person and you will spend quite some time at the ATM to purchase a large amount. This could easily attract the wrong kind of attention if the Bitcoin ATM is situated in a bar or in a cafe.

Bitcoin ATMs - much like in-person cash transaction using LocalBitcoins - are thus more of an option for making small anonymous purchases for safety reasons.

Having said that, as with in-person cash trades, buying bitcoin anonymously using Bitcoin ATMs also carries a certain level of risk, albeit less than in-person trades do.

Using a Prepaid Card to Buy Bitcoin Online

If there is no in-person cash market on LocalBitcoins in your region and there is no Bitcoin ATM located in your city, then you will have to resort to purchasing bitcoin online. However, whenever you log onto the Internet, you leave behind a trail of where you are (due to your IP address), what searches you make, and which sites you visit. Also, most digital fiat currency payment methods, such as bank transfers and credit cards, leave a paper trail that can identify you as the buyer.

However, in countries like the US, you can purchase and load up a prepaid card at supermarkets and convenience stores without identity verification. You can then use these prepaid cards to purchase bitcoin online at exchanges that do not require any verification and allow you to pay with a card. Exchanges, where that works, include CoinMama (up to USD 150) and Virvox, for example.

When visiting these online exchanges, it is recommended to use the encrypted browser Tor or a VPN to hide your IP address to keep your purchases private while online.

Buying Bitcoin on a Decentralized Exchange Using Cash Deposits

Alternatively, one of the most private ways to purchase bitcoin online - and at higher volumes than with prepaid cards - is on the decentralized exchange Bisq using cash deposits as a payment method.

Bisq is a decentralized cryptocurrency exchange that has Tor integration, which means your IP location automatically stays hidden when using the platform. Furthermore, Bisq requires no identification nor does it hold any user funds, which makes is anonymous and also safer than centralized exchanges.

To buy bitcoin anonymously on Bisq, you can make a cash deposit for the amount of bitcoin you are purchasing and then show the confirmation to the seller to close the transaction so that you can receive your purchased bitcoin. Bisq uses an escrow service to ensure all transaction run smoothly and also has a mediation service in case any issues should arise.

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