Intro
I stumbled upon the idea, how I could pay with my fiat to buy BTC in a private way, so that I can limit the possibility of censorship. I mean here private, as not a platform to buy and sell on it, but how I can transfer my fiat money to the other person, who sends me bitcoin in return, without revealing my identity to him.
I know it is not meant to be used like this, but still it is an interesting topic to discuss.
Ways to pay with fiat more privately
- Cash
- Gift cards
- (?) Cashu
Cash
Description
I think the highest decree of privacy can be achieved for fiat payments are paying by cash. Why? Noone needs to know you, to accept cash from you. Basically you don't have to tell your name in a grocery shop or sign a form to buy milk. You just give them a piece of paper, that they trust will have value later. Also paying by cash does not create entries in a database, so requires bigger effort to maintain a sort of payment log to track transactions.
How to buy with cash
- Through friend
- Knowing a btc seller from a meetup or btc meeting
- LocalCoinSwap
- Bitcoin ATM
- P2P through cash deposit to bank account
For further details you can check this page: https://99bitcoins.com/buy-bitcoin/buy-bitcoin-with-cash/
Comparison
| Advantage | Disadvantage |
|---|---|
| Enhanced privacy | You need to meet in time and space to use it.* |
| Cash transactions can't be directly connected to only bitcoin to restrict it, because many people use it for other purposes. | Risk is higher to be mugged, if meeting in person |
- With cash deposits, you can circumvent this, but still you need to be able to go into a bank, to make the deposit, so you can't do it from the toilet.
Gift cards
Description
Gift cards are prepaid cards, that can be used in certain shops. They were created to be used as a gift for a certain shop, as people may assume, that it looks nicer to give a gift card to a shop, then to just give an "all purpose gift card" / cash. Gift cards could be purchased online, and offline. Offline bought gift cards could be purchased by cash, but I am not sure if it is transferable in a way, that only the transferee can use it.
How to buy with gift card
- Through peer to peer exchanges
Comparison
| Advantage | Disadvantage |
|---|---|
| You don't give away your bank details | The other side still might get to know your name or some details |
| Not "any-purpose", can only be spent on certain items. This leads to lower liquidity. | |
| The company who creates these gift cards might suspend your account for using such. (e.g.: Amazon does this.) | |
| Online redeemed gift cards might be usable to track transactions. | |
| Usually people don't buy too much gift cards, therefore if 1 account buys many, it can seem like suspicious, and it might lead to ban. |
Cashu
Description
One problem with gift cards are, that they are identifiable, who they belong to if you buy them online. So buyer and user accounts could be connected. As I get to know cashu, the chaumian ecash, I realized that this issue of connecting the "gift card" or ecash to an identity could be solved. Therefore, I thought that maybe it could be an intermediate step to transforming to bitcoin, by not having ecash denominated in bitcoin, but in some fiat. So when I would buy btc, I would first buy ecash, and send that ecash to the btc seller, who could redeem it to fiat to keep its "any-purpose" utility.
To my luck, a few days ago, Calle shared a note about nut-strike see: https://nostr.band/note1clgmazrcn82jxw6u3pus6fj4xtzr979d8t9wgqv450a2nv5s94lsnp26pg , which is kind of Cashu ecash denominated in dollars. It seems quite a great initiative. Let's see what it holds for future.
The problem with this approach could be, that if the way of buying cashu through nut-strike is unique, not a way as people send money over strike (small anonymity set), then it can also be easily flagged by other companies/banks to deny sending funds to it, to circumvent buying cashu.
Conclusion
Adding new private methods to buy bitcoin might fail, because if a method only exist to help to buy or sell bitcoin, it can easily be detected by companies or banks, and if they want to ban selling crypto, they can easily do that.
So at the end those methods are the best, that are used for many purposes, and buying bitcoin with it is only 1 of many. Therefore, if they want to ban it, they would cause pain to too many people, so it will be little harder.
At the moment, buying with cash seems the best way for now, by knowing it's drawbacks and preparing for it.