If you spent time going down the Bitcoin rabbit hole or bought Bitcoin from an exchange, you came across the term KYC (I know your customer). You may also have participated in this process by passing a large amount of personal information to the above exchanges to purchase Bitcoin.After your purchase, you have what others call
“KYC Bitcoin.”
What does that mean? This means that your ID is associated with the purchase of that Bitcoin and the associated wallet address where the Bitcon resides as a UTXO (Unused Transaction Output).
Is KYC Bitcoin really bad?
If privacy and freedom are priorities, the simple answer is yes. KYC Bitcoin is the primary identification data that can be used to track transactions. Many believe that the KYC goes against everything that Bitcoin’s biggestists believe. The average Bitcoin user often doesn’t know the difference. For those who want to know more later, I’ll talk about personal preferences and tools later. This is not a privacy guide, it is intended to let people know that I have used a tool that seems to help me regain my privacy.
The execution of a simple on-chain transaction that sends Bitcoin from one address to another is recorded in the Bitcoin public blockchain.If you have never been or are interested in it, we recommend that you consider the Bitcoin Block Explorer, which looks like this: mempool.spaceYou can check their transaction history by entering the Bitcoin wallet address. In addition to this public information, passing through the KYC on the exchange allows the exchange to record the transaction information. They can attach the transaction to your ID and location and know how much Bitcoin was purchased and how much was sent to another wallet address. As mentioned earlier, many feel that this is not a problem, but it is important for both new and existing Bitcoin users to be aware of the information shared with the KYC exchange. I am.
So how much of your Bitcoin shouldn’t be KYC?
There is no perfect formula like 50/50 or 60/40. This goes back to your needs and the daily usage of Bitcoin. If you already have KYC Bitcoin, it is up to you to decide whether to keep or sell it and to get non-KYC Bitcoin. It is unwise to hide or keep Bitcoin already KYC private. If you want to get Bitcoin other than KYC, we recommend that you sell KYC Bitcoin and then use tools such as the following to maintain your privacy best practices.
As a personal preference, I am devoted to the privacy aspect of Bitcoin other than KYC. I don’t think any entity or governing body should know how or what Bitcoin is used for. That doesn’t mean I don’t have KYC Bitcoin — but I understand the risks I’m taking.It’s easy to buy Bitcoin from the exchange instead of going through some additional hoops for privacy, such as what you need to buy from BisqPeer-to-peer exchange. — — But I morning Interested in privacy I would consider such a service.
Another tool you can use to regain your privacy Raspi Blitz, Bitcoin and Lightning Node. This device can be built at home using a Raspberry Pi.The service I’m using is JoinMarket To use CoinJoin..I use Electrum (Another service in the Raspiblitz suite) Allows you to create new wallets with lots of new addresses so that when the combined transaction completes, you can send to many addresses without reusing them. This helps reduce the deterministic hierarchy of my UTXO history. This is what many chain analytics companies use to track Bitcoin transactions. This is not a technical guide, but by using the two tools mentioned above, you can continue to send selected Bitcoins while creating new wallets or destroying old wallets as needed. I can. Now this is not an absolute surefire way. If I deposit Bitcoin on an exchange (or where the KYC is) because I want a flat, I can basically undo all the work I have done. why? Reusing Bitcoin addresses is the fastest way to reconnect all points in between. Therefore, when it comes to using JoinMarket and Electrum, the ultimate goal is to keep the combined KYC Bitcoin away from the addresses and locations where KYC is needed. Separate the stack.
After all, like everything else between privacy and freedom, Bitcoin also falls into the challenge. There is no optimal solution for each Bitcoin user, but you need to be familiar with how Block Explorer works, privacy tools such as JoinMarket, and the amount of information needed to give up running KYC. There is also space for both kyc bitcoins and non-kyc bitcoins. Find the balance and know to keep each one separate.
This is a guest post by Anthony Feliciano.The opinions expressed are completely unique and are not necessarily BTC Inc or Bitcoin magazine..
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