So You Have KYC Bitcoin — Now What?

If you person spent clip going down the rabbit spread of bitcoin oregon bought bitcoin from an exchange, past you person travel crossed the word KYC (Know Your Customer). You’ve besides astir apt participated successful the process by handing implicit a ton of idiosyncratic accusation to said speech successful bid to acquisition bitcoin. After your acquisition you are holding what others telephone
“KYC bitcoin.”

What does that adjacent mean? It means that your individuality is present tied to the acquisition of that bitcoin and the associated wallet code of wherever that bitcon resides arsenic a UTXO (unspent transaction output).

Is KYC Bitcoin Really Bad?

If you spot a precocious precedence connected privateness and freedom, past the abbreviated reply is yes. KYC bitcoin is simply a large portion of identifying information that tin beryllium utilized to way your transactions. Many judge that KYC goes against everything a Bitcoin maximalist believes in. The mean idiosyncratic of bitcoin often knows nary different. I volition get into idiosyncratic preferences and tools aboriginal connected for those who privation to cognize much aboriginal on. This is not meant to beryllium a usher for privacy, but to pass radical of tools that I person utilized that tin hopefully assistance them regain immoderate privacy.

Performing a elemental on-chain transaction of sending bitcoin from code to different is recorded connected the Bitcoin nationalist blockchain. If you person ne'er done truthful oregon are curious, past I suggest looking astatine a Bitcoin artifact explorer, specified arsenic mempool.space, wherever you tin input bitcoin wallet addresses and spot their transaction history. In summation to this nationalist information, having gone done KYC with an speech allows transaction accusation to beryllium recorded by the exchange. They tin connect that transaction to your ID and location, and they volition cognize however overmuch bitcoin was bought and however overmuch was sent to different wallet address. As stated earlier, galore consciousness this is not an issue, but I consciousness it's important for some caller and existing Bitcoin users to beryllium alert of the accusation being shared with KYC exchanges.

So How Much Of Your Bitcoin Should Be No-KYC?

There is nary cleanable formula, similar 50/50 oregon 60/40. This goes backmost to your needs and mundane usage of bitcoin. If you already person KYC bitcoin, it's up to you to find if you privation to support it oregon merchantability it and effort to get non-KYC bitcoin. It is unwise to effort and marque already KYC’d bitcoin hidden oregon different private. If you’re looking to get non-KYC bitcoin, past the champion thought would beryllium to merchantability immoderate KYC bitcoin and past usage tools similar the ones listed beneath to effort and support privateness champion practices.

As a idiosyncratic preference, I thin much connected the non-KYC bitcoin privateness broadside — I don't judge immoderate entity oregon governing assemblage should cognize however oregon what I walk my bitcoin on. That isn't to accidental I don't person immoderate KYC bitcoin — but I recognize the hazard I’m taking. It's casual capable for maine to bargain bitcoin from an speech alternatively than going done immoderate further hoops for privacy, specified arsenic those required to bargain from Bisq, a peer-to-peer exchange. — but erstwhile I americium interested successful privateness I see specified services.

Another instrumentality that I usage to instrumentality backmost my privateness is RaspiBlitz, a Bitcoin and Lightning node. You tin physique this instrumentality astatine location moving disconnected a Raspberry Pi. The work I usage with it is JoinMarket which utilizes CoinJoin. I usage Electrum (another work successful the Raspiblitz suite) to beryllium capable to make a caller wallet with loads of caller addresses, truthful erstwhile coinjoined transactions are complete, I tin nonstop them to galore addresses and not reuse addresses. This helps to trim the deterministic hierarchy of my UTXO history, thing that galore chain-analysis companies usage to way bitcoin transactions. This is not meant to beryllium a method guide, but by utilizing the 2 tools mentioned, I tin make caller and destruct aged wallets arsenic needed portion continuing to nonstop bitcoin to my choosing. Now this isn't a foolproof method. If I spell and deposit bitcoin backmost onto my speech (or immoderate spot I KYC with) due to the fact that I privation fiat, past fundamentally each the enactment I did tin beryllium undone. Why? Because reusing a bitcoin code is the fastest mode to reconnect each the points successful between. So, if you bash extremity up utilizing JoinMarket and Electrum, your eventual extremity end is to support post-coinjoined KYC bitcoin distant from addresses and places wherever you person to KYC. Keep your stacks separate.

In the end, similar everything other betwixt privateness and freedom, Bitcoin falls into a conundrum arsenic well. There is nary cleanable solution for each Bitcoin user, but 1 should familiarize themselves with however artifact explorers work, privateness tools, specified arsenic JoinMarket, and however overmuch accusation you are required to springiness up with performing a KYC. There is abstraction for some kyc and non-kyc bitcoin arsenic well, conscionable find your equilibrium and cognize to support each separate.

This is simply a impermanent station by Anthony Feliciano. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc oregon Bitcoin Magazine.