Purchasing cryptocurrencies, such as Ethereum, on an anonymous basis remains an essential concern for many individuals. Far from attempting to engage in illegal activity, many individuals feel that it is within their right to purchase crypto while maintaining their personal information as confidential. But how anonymous is Ethereum really?
The truth is that blockchain networks such as Ethereum offer, at best, a kind of semi-anonymity. After all, a blockchain is a public ledger. All of the information required for transactions gets stored on the network and can be verified by anyone on sites such as Etherescan.
However, transactions on Ethereum do not contain easily identifiable labels. Each one is linked to an address that corresponds to a public key that is accessible through a private key. They are not tagged, for example, to an easily identifiable username.
Not everyone, however, believes in the concept of anonymity within this space. Some choose to create a tag for their Web3 activity through sites like Ens.domains or Unstoppable Domains. Other platforms, like Chainanalysis, are involved in doing detective work on blockchain networks. They can then provide valuable information that is of value in crypto criminal cases.
Besides all of this, most centralized exchanges require KYC verification. Finally, there are even government institutions and those representing the traditional financial system that actively call for more significant regulations within the crypto sector.
Still, for now, there are ways to trade Ethereum anonymously and legally. Let’s look at the reasons why some individuals would wish to do this. And let us also investigate some of the best strategies that can be used.
Why would someone want to buy Ethereum anonymously?
The philosophy of Bitcoin, the very first cryptocurrency, always had anonymity as a central tenet. Ethereum and many other projects in the blockchain space share a similar view. It’s not an essential matter, necessarily, because people involved have something to hide. Most of those advocating for this believe that financial information should be a personal matter.
There are a number of reasons why many wish to buy Ethereum under the guise of anonymity. Some of these include:
- Not wishing to leave a digital footprint for philosophical reasons: Many in the crypto sphere believe that it is their right to keep this type of financial information private.
- Avoiding corporate control: Corporations that have detailed data about their customers can use this to manipulate their opinion. This is something that some Ethereum users wish to avoid.
- Minimize the risk of theft: By having less, or no information that is publicly available, users are less at risk of being targeted by criminals.
- Avoiding an unfavorable political climate: Cryptocurrencies aren’t viewed approvingly in every part of the world, and some users are choosing to protect their identity in order to avoid issues with authorities.
Methods for buying Ethereum anonymously
Peer to peer exchanges
One of the ways to purchase Ethereum while maintaining anonymity is through a Peer-to-peer exchange (P2P). In theory, this allows users to trade with one another directly. When an exchange is involved, it will provide an escrow service, essentially offering protection to both parties involved in the trade.
For example, Binance provides this service through which they offer protection to both buyers and sellers. The Binance P2P escrow service reduces the risk of fraud and helps reduce trading fees. Furthermore, users won’t be required to provide their personal ID information when signing up for an account.
Other P2P exchanges include Paxful, ByBit, and Huobi. Each features its own security model. For example, Paxful integrates biometric data within its verification process. Most of these require fewer personal details than traditional exchanges upon registration.
There are some notable pros and cons worth discussing when speaking about P2P exchanges.
- Can help maintain anonymity
- Tend to have lower fees
- Multiple payment methods are welcome
- Easily accessible and highly secure
- Slower than OTC exchange services
- More difficult to use than exchanges
- Not every platform is as dedicated to ensuring a high level of anonymity
Example cash markets for ETH/USD
Peer to peer marketplaces
One of the easiest methods to purchase Ethereum while maintaining anonymity is by using a peer-to-peer (P2P) marketplace. This allows crypto users to trade without the need for a third-party intermediary. Unlike the P2P exchange, the marketplace only facilitates communication between buyer and seller through an encryption system. Once the trade is set, you will be able to buy/sell Ethereum directly from your non-custodial wallet.
Platforms such as LocalCryptos or Localcoinswap put buyers and sellers of crypto in contact with each other. These are non-custodial exchanges, so the service never has access to your wallet information. Once the trade is set, the buyer will pay the seller using a method outside of the platform. They can even meet to complete the transaction.
P2P marketplaces might be favored by those who adhere to the original concept of cryptocurrencies, but, naturally, pros and cons need to be considered.
- Designed to ensure anonymity
- Non-custodial exchange and escrow service
- Low fees between 0.25% and 0.75%
- Encrypted messaging
- Cannot guarantee the complete security of trades
- Few cryptocurrencies are supported
- Have garnered attention from authorities that are calling for a higher degree of regulations
Frankly, purchasing crypto coins, such as Ethereum, used to be more complicated than it is today. Services like LocalCryptos, or CEX, authorized the purchase of crypto directly through a bank transfer. The process remains simple! Users only need to deposit funds within an account via bank transfer (other forms of payment are usually available as well) and use them to purchase cryptocurrencies. Usually, these services require fewer identification details than the majority of crypto exchanges.
There were positives and negatives to using this strategy, however.
- Well-established platforms
- Easy to use
- Generally feature mobile apps
- Higher fees
- Include a limited number of cryptocurrencies
Ethereum (ETH) ATMs
Cryptocurrency ATMs function really as kiosks that allow users to buy coins such as Ethereum. Although the term ATM is a bit misleading, they do serve a similar function. These kiosks work by connecting to the Ethereum blockchain and facilitating the trade of crypto tokens in exchange for the cash that customers deposit.
Platforms such as LocalCoinATM assist in finding nearby kiosks. Over 3000 such locations can be found all over the world.
This strategy helps protect your anonymity. It only requires you to connect your crypto wallet to the machine and input the funds and required information in order to complete the transaction.
Is this a method that you should try?
- Very helpful in maintaining a greater degree of privacy
- Easy to use and favor ID security
- Quick to use
- They help to pioneer innovative technology
- It may be hard to locate an ATM near you
- High transaction fees
- Slow or poor customer support
Of course, the easiest method to purchase Ethereum at the moment is through a centralized exchange. In fact, approximately 99% of all crypto transactions involve such a service.
The majority of centralized exchanges, however, require KYC (Know-Your-Customer) information upon setting up an account. This info is used as part of AML (Anti-Money Laundering) operations. Ultimately, these actions are taken to ensure the security of both the platform and its customers.
For users that are wary of offering their private information for various reasons, there are some crypto-exchanges that still do not require KYC verification or ask for a limited amount of information.
At the time of writing, some of these exchanges include Bybit, dYdX, or exchange aggregator CoinSwitch. Even some of the most famous exchanges, such as Binance and Kraken, require limited data verification for trades, deposits, or withdrawals that fall underneath a specific limit.
As always, there are positive and negative aspects to consider.
- Features a high number of cryptocurrencies
- Easy to use
- Offer liquidity, volume, and high transaction speeds
- Users provide custody over their assets
- Could be subject to price manipulation
- Many exchanges have faced security issues in the past
Numerous decentralized exchanges (DEX) have garnered popularity over the past couple of years. While their technology may differ, they all share a few characteristics. Decentralized exchanges don’t hold custody over users’ crypto assets, and they tend to include a large number of featured coins.
These DEXs operate very similarly to Peer-to-peer marketplaces. Most of these utilize smart contract technology and liquidity pools. These, essentially, help match buyers and sellers of a particular digital asset.
DEXs are semi-anonymous as, usually, they merely require a user to connect their crypto wallet to access these services. This could change, however, in the near future, with some calling for greater implementation of KYC practices.
Uniswap, Pancakeswap, and Curve are among the most popular decentralized exchanges.
Some of the positive and negative aspects of using decentralized exchanges include:
- They don’t require an intermediary
- DEXs are non-custodial
- Have proven to be reasonably secure
- Some may not be as decentralized as advertised
- They offer low liquidity
- Their interface could be difficult to use
The rise in popularity of cryptocurrencies has meant that traditional financial sectors, such as those that offer debit card services, have been keen to get involved. For example, the aforementioned CEX, as well Switchere or Paxful, allow users to purchase digital assets with prepaid cards. However, for this process, the service may require some personal information.
There are still some services (such as DameCoin) that allow the purchase of Ethereum through a prepaid debit card and without ID verification. However, their reputation in the crypto world is not quite as established as the aforementioned ones.
Risks of buying ETH without an ID
There are numerous and, often, entirely valid reasons for wanting to buy ETH without providing your personal information. However, as the crypto space has become more regulated, choosing one of the strategies that we previously outlined can be risky. Here are some of the dangers that you may encounter:
- Security issues: Services such as Peer-to-peer marketplaces provide assistance in finding an Ethereum buyer with a seller. However, the trade itself involves the agreement of the two parties without the involvement of an intermediary. Whether you are the buyer or the seller, this may raise the risk of getting scammed
- Lack of regulations: The benefit of using centralized exchanges for purchasing Ethereum is that these are subject to regulations imposed by authorities. It all means that you will need to trust your intuition and take your chances when using a decentralized service
Pros and cons of buying ETH without an ID
Many of those looking to buy ETH without an ID do so for philosophical reasons, while others have practical considerations in mind. Regardless, it is best to remember both the risks and rewards of getting involved in such trades.
- Maintaining control over one’s privacy and financial information
- Requires minimal intervention from intermediaries
- Won’t require waiting for KYC verification to be completed
- It’s a complicated process, more so than choosing to use a centralized exchange
- A limited supply of liquidity is a constant issue
- Requires knowledge of using a crypto wallet and services such as P2P markets
- Can Ethereum be anonymous?
The Ethereum network works as a public ledger that provides information related to each and every transaction that occurs on the blockchain. The information, however, is tied to a public address, not necessarily, to a name or physical address.
- Can you buy Ethereum without an ID?
There are still some strategies that can be employed to purchase ETH without providing ID information. Peer-to-peer marketplaces and exchanges, as well as Ethereum ATMs, can help maintain a buyers’ semi-anonymity.
- Can you buy ETH in person?
There are several ways to purchase Ethereum, including buying it in person. Peer-to-peer marketplaces can assist in connecting prospective buyers and sellers of ether, who will then have the option of meeting in order to finalize the transaction.