Demand for decentralized crypto exchanges seems to be on the rise. Governments around the world are cracking down on centralized exchanges and demanding that they enforce anti-money laundering rules. Most exchanges feel threatened and some have already started closing down.
A lot of crypto traders are also against the idea of governments regulating exchanges, and they are looking for alternatives. Decentralized exchanges seem to be an ideal option for many traders who want to trade anonymously. However, there are also several centralized exchanges that require no registration or verification of any kind. Here is an overview of the most private crypto exchanges and how they operate.
Peer to Peer Exchanges- Buy in Cash
The easiest way to buy bitcoins anonymously is to use cash. Access a website like Localbitcoins.com and look for a customer willing to buy bitcoins in cash within your locality. Local Bitcoins holds the coins in an escrow account until the seller confirms they have received the payment. Since you will be using cash and trading with a stranger, none of your personal details will be used anywhere. However, keep in mind that buying or selling Bitcoins with cash has several limitations:
- Safety- how much cash can you carry when meeting a stranger? Buying bitcoins is not safe, especially where large sums of money is involved
- Liquidity- in most P2P exchanges, traders sell low amounts of coins. On Localbitcoins, for example, it’s hard to find someone willing to buy more than 50 Bitcoins
- Trust-buying cryptos on P2P exchanges means you have to trust other traders to honor their side of the deal, and this doesn’t always happen
Centralized Anonymous Exchanges
Some cryptocurrency exchanges offer a great deal of anonymity when trading on them. Take ShapeShift, for example. The exchange is owned by Erik Voorhess, an American. ShapeShift works as an altcoin exchange that can be used as an API on a wallet, as an app or as a web-based exchange. ShapeShift offers one of the easiest ways to trade coins while keeping you anonymous.
To use the exchange:
- Visit ShapeShift
- Select the cryptocurrency in your wallet
- Select the altcoin you want your cryptos exchanged to
- Enter the amount of cryptos you need exchanges and appropriate wallet addresses
- Visit your personal wallet and initiate the payment to an address provided by ShapeShift
- Expect to receive your converted coins within hours
Flyp.me is one of the most private exchanges. Like ShapeShift, this exchange is owned by someone. However, it’s designed in such a way that you control your trading activities. You hold your cryptos in a personal wallet and only use the exchange to buy and sell altcoins. You don’t need an account or verification of any kind.
Thanks to its focus on giving your privacy when trading, there is little chance of you losing cryptos to the exchange. Flpy.me can’t suspend your account because you don’t need one. In the unlikely case, the exchange gets hacked, you still wouldn’t lose your cryptos because they don’t store cryptos for you. The only issue you would have trading on the exchange is delayed payments, like when the Bitcoin blockchain is overloaded.
Changelly and ShapeShift go hand in hand. They work in the same way, allowing you to exchange altcoins instantly with no verification needed. Like ShapeShift, Changelly can be accessed online, on apps or on their partnering crypto wallets and sites. The only difference between Changelly and ShapeShift is their owners. While Erik Voorhees own ShapeShift, Changelly is owned by MinerGate, a mining pool for Bitcoins.
Changelly also asks for registration; an email address where a password is sent to help you secure your account. Other than that, there is no verification required even when buying cryptos using fiat on the exchange. Using Changelly works in more or less the same way as on ShapeShift.
In the spirit of decentralization, some exchanges allow traders to participate in managing the exchange through computer nodes installed in different parts of the world. This way, decentralized exchanges cannot be regulated or be required to enforce anti-money laundering rules. They don’t require users to create accounts or give in any form of personal information.
Traders on decentralized exchange trade with utmost anonymity. Despite this, however, decentralized exchanges have issues as well. Some exchanges are often criticized for poor management. Because the exchanges are still involved in the trading process, poor management of poorly programmed codes can affect efficient trading on the exchange.
BitShares is a popular decentralized exchange built on a blockchain-graphene. The exchange requires users to create a simple account but no further verification is required. The exchange ranks 83rd on Coinmarketcap.com and has a daily trading volume of $7.7 million. BitShares lists a wide range of cryptos as well and allows trading with fiat currency. Keep in mind, however, that verification may be required when buying large amounts of Bitcoins using fiat.
Etherdelta was among the most popular decentralized crypto exchanges in 2016 and 2017. The exchange was designed to cater for Ethereum and ERC-20 token traders. It’s built with smart contracts and the ethereum blockchain in mind. While Etherdelta allows you to make trades while remaining anonymous, it’s affected by all issues currently facing decentralized exchange.
- Slow trades- Trades on decentralized exchanges have to go through blockchains, and this can take hours for a trade to be completed
- Not user-friendly- many decentralized exchanges are not easy to use, at least not to beginners
- Possibility to make mistakes- due to lack of ease of use to beginners, a lot of traders make mistakes when trading, often losing their funds
- High Fees- most decentralized exchanges offer higher than average fees, which can be inconvenient to low-volume traders
- Most decentralized exchanges are dependent on the Ethereum blockchain. If anything happens to Ethereum, it may affect a lot of trading on decentralized exchanges.
- Low Liquidity- since decentralized exchanges are still a new thing, they have low liquidity compared to other types of trading platforms
What’s the Best Exchange with great anonymity? It’s difficult to decide the best exchange. If you want to trade cryptos anonymously, you have to research more and make the choice on your own. However, keep in mind that a centralized anonymous exchange like Binance or Flyp.me will be easier to use than a decentralized exchange.