In the world of exchange, many find it difficult to use centralized exchange due to KYC verification. I keep asking myself, it's necessary to do KYC before you can be into a crypto exchange.
Many buyers who prefer not to identify their identities face a problem with this KYC.
Meanwhile, it's standard verification that major exchanges are required for anyone that wants to trade crypto. But it's necessary for everyone?.
What is KYC
KYC simply stands for "Know your Customer or Client. Is the process of verifying traders' identity. KYC is used to confirm the person who claims to be a customer and to prevent illegal activities, like money laundering.
KYC is mostly common in many financial institutions, banks, and cryptocurrency exchanges.
Yet I don't get it to understand if KYC is the solution to illegal activities, cause I've seen a process where someone uses a fake identity, meanwhile, people engaged in money laundering with KYC. Meanwhile, those centralized exchanges have most high risk than decentralized Exchanges even with their KYC
Though it is not a bad thing to do KYC verification and it doesn't take much time, KYC just consists of "Date of Birth, Social Security Number, Address" and some financial institutions required for government-issued Identity Card.
Can you buy Crypto without KYC?.
There are common ways to buy Crypto without identity, but most people fear it because they think it involves risk. I can assure you buying crypto on decentralized exchange and centralized exchange is 50 50.
Let go deep into what is meant by Decentralized Exchanges and Centralized Exchanges.
Decentralized Exchanges
A decentralized exchange that doesn't require verification of KYC, enables users to remain in control of their finds by operating on the blockchain. it involved peer-to-peer marketplaces and Automated market markers.
Peer-to-peer market places: is a platform that allows buyers and sellers to post cryptocurrency offers. If you have ever used this app provide for #hive, hive-engine, you'll know much about what I mean by peer-to-peer marketplaces.
Automated market markers (AMMs): although AMMs might require KYC due to connecting the crypto wallet without funds to AMMs to buy Crypto with funds. But I can assure you KYC is optional. Buying cryptocurrency with cash on AMMs and then later transferring directly to any connected crypto wallet for more cryptocurrency trading.
There are several ways to exchange cryptocurrency without the need for KYC, for instance, you can buy Bitcoin at Bitcoin Atm which is widely known all over the world.
Decentralized Exchanges gives buyer who prefers not to identify their identities another option of obtaining their Crypto with peer-to-peer Crypto marketplaces, Automated market markers, and Bitcoin ATMs.
Centralized Exchanges
Centralized exchanges are platforms and apps that enable traders to buy and sell and exchange cryptocurrency against other cryptocurrencies.
Mostly KYC verification is common on centralized exchanges to get user identity before any trades. Centralized Exchanges are limited to buying Cryptocurrency using USD, EUR. Examples of centralized exchange are Bithumb, Coinbase, Gemini, and several more I can't focus on right now.
Most people believe the centralized exchange is safer than decentralized. But the centralized exchange has wide limitations which are likely to be obsolete soon because they are lack blockchain technology leverage to improve their capabilities and efficiency.
Their limited in security i.e insecurity due to being the custodian of their user's funds and give a few Features key for their users to control. They can easily be hacked by a hacker due to their storage on the server.
It also has a high risk for their users, which involves a problem in latency, market manipulation, and if their hardware failed. Even most of them consist of illegal trading because they most offer than the announced fee, i.e they can manipulate orders.
Conclusion
I can assure you Decentralized is safer than centralized exchanges that use KYC. I never say decentralized Exchanges never use KYC. Decentralized Exchanges also involved KYC but still, yet you can perform cryptocurrency exchanges without their features.
Incase I don't understand why KYC is important in exchange of Cryptocurrency, I don't mind learning form you by stopping by and add your comment. Thank you
I am adedayoolumide a Vblogger, programmer. I write out my heart with pen. I always admire the presence of Learn man to make a contribution to our ecosystem. Follow me for more or my blog post @adedayoolumide
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