The emergence of cryptocurrency launched a brave new world of financial independence without the control of central governments and their supervisory agencies. People, for so long subject to the rules of using physical cash, are now able to adopt virtual currencies, especially bitcoin, as a medium of exchange and a store of value.
With great rewards come great risks, however, and buying and selling crypto anonymously is no exception. Although decentralization and anonymity are the main selling points of bitcoin and other cryptocurrencies, they also increase the risks associated with buying and selling crypto without ID.
Being able to buy digital currencies and hold them is great. Being able to trade them or use them to buy real-world goods and services is also great. Being scammed out of your crypto and not being able to do anything about it? Not great at all. Unfortunately, this is one of the things that can happen when buying and selling crypto without verification.
Governments all over the world are slowly waking up and beginning to tighten regulations around digital currency trading in their domains and this isn't necessarily a bad thing. Even though privacy and anonymity are the foundations of the crypto industry, it also makes cryptocurrencies vulnerable to various risks, some of which the individual crypto enthusiast might be powerless to defend against.
With that in mind, here are the top 9 risks associated with decentralization. This might interest you if you buy and sell crypto anonymously and want to know the pitfalls to watch out for.
"Bitcoin is great, but if it's not private, it's not safe," said Edward Snowden and crypto traders weren't the only ones paying attention. The anonymous nature of bitcoin has made it the medium of choice for money launderers and criminals to move their ill-gotten wealth around.
Because anonymous exchanges allow you to buy and sell crypto without ID and do not ask any questions, cybercriminals find it easy to convert their criminal loot to bitcoin or USDT and use an exchange or peer-to-peer network to convert it back to cash in another jurisdiction where they cannot be caught spending the money.
Earlier in June, the UK's security agencies confiscated almost $160 million in a money laundering operation but that's just one successful detection in an ocean of evasion tactics that criminals use to ferry money from under the noses of the police by using exchanges and crypto brokers.
For day-to-day traders, this means potentially using the same services as cyberthieves, ransom collectors and terrorists, which can be deeply unsettling. From this perspective, using a trusted crypto exchange that accepts KYC, instead of one of the myriad sites that allow you to buy and sell crypto with no ID, is not such a bad idea. All you're doing is exchanging a little privacy for better security and a safer trading environment.