Right now we are definitely in a down period in the cryptocurrency realm, but that doesn’t mean you should let your guard down in terms of privacy. Recently, we saw a bunch of dark web arms and drug dealers get arrested. This isn’t the sort of thing I have a problem with, but just because there are a few bad apples, doesn’t mean we don’t have the fundamental human right to privacy.
You don’t have to think of government as the foe, but it is always better to be safe and figure out how to preserve your privacy. Even if this isn’t your top priority, it is good to be considerate of those you are doing business with as well, since you can deanonymize them by having bad “crypto hygiene”.
Cash is King
The first rule of preserving your privacy is to always use cash to get in and out of Bitcoin. As soon as you use an exchange or organization that uses KYC (Know Your Client) or AML (Anti-Money Laundering) regulations, your privacy virtually disappears. Not to mention the fact that those regulations are a huge nuisance.
There has been no proof that these regulations ever prevented any terrorism or money-laundering, and the people they hurt the most are regular citizens who lose time and money while complying with them. The tons of fees that non-criminals have had to pay to create a paper trail are unlikely to have prevented any actual crimes from occurring.
It is rare to find an exchange that doesn’t follow the KYC and AML regulations, because in order to ensure their long-term survival, they need to cooperate with the governing bodies. There are several decentralized exchanges that are better at this, but that is constantly subject to change and I would recommend you researching it on your own.
Other Preventative Measures
If you do break the cardinal rule of privacy, you should find a way to anonymize your coins using a coin shuffling service. Once again, this will require research to determine what you think a trustworthy service is.
Another useful point is to avoid reusing bitcoin addresses because it gives a repeat “location” that makes it easy to identify and track your payments. Not only does this compromise you and your other accounts, but it deanonymizes those you have transacted with too!
Finally, use TOR or a VPN enabled network that has anonymity baked into it. This is good practice not just for cryptocurrencies, but for protecting identifying information and credit cards.
A Balanced Conclusion
Some may think this post is a little paranoid and taking things too far, but you don’t have to agree with me. You definitely don’t have to be some crazy combination of a crypto-anarchist and libertarian to agree with this. At a base level, privacy is about avoiding having other people or organizations interfering in your life.
Many of these regulations we have discussed result in a middleman taking a cut or banks interfering with the flow of funds. Just think about how many regulations or problems you’ve had while trying to buy Bitcoin, and imagine you were a small business or were sending money to your home country. You’re not committing a crime, but you sure end up paying extortionate fees.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.