Cryptocurrencies are, by their very nature, a more secure and independent form of money. Nobody should be able to monitor your cryptocurrency related activities if you don’t want them to. This includes government agencies like intelligence services, tax agencies and central banks. These entities will try to obtain your cryptocurrency information against your will. As a crypto holder and trader, how do you keep them at bay?
The solution is in the title of this post: you have to keep your crypto dealings largely under wraps.
Why am I writing this?
For those having a moral conundrum with this topic, those who may think that I’m a “bad” person for sharing this type of information; let me set you straight.
When I young, I was one of the most law abiding citizens you’d ever meet – an absolute stickler for the rules. To a degree I still am: if I play a board game I stick to the rules exactly and any deviation from them (unless previously agreed upon) grates against the very fibre of my soul.
But like most people today, my government has sold me out. Collusion between corrupt politicians (i.e. – all of them) and the big money of the corporate world, especially the banking world, has seen their interests placed far above the interests of us “commoners”. Since their interests are based on greed and self-enrichment at the expense of anything else (literally), the status quo has become most unsatisfactory (not to mention unsustainable). The rules of modern society are designed from the ground up to benefit the rich and to keep the masses oppressed. Feel free to argue this point against me using propaganda terms such as “free market” or “democracy” – I challenge you.
Cryptocurrencies are designed to put the power of wealth generation back into the hands of the individual, your hands. They enable you to compete on a level playing field by removing the advantages that the rich and powerful grant one another.
No government, bank or revenue service has any business knowing what you do with your crypto investments.
It is not their fiat currency, it is not gold mined and minted by them, it’s not listed on their stock markets, it’s not one of their financial instruments and it isn’t even “held” in their country. IT’S NONE OF THEIR BUSINESS!
If you believe otherwise then you are a victim of their brainwashing. Start thinking for yourself!
Low-flying: a “How-to” guide:
While there are many methods, let me tell you how I do it. Note that while there is some overlap, this is not an article about how to keep your crypto secure – that’s an entirely different matter.
Only tell state departments the minimum that they really need to know
When you buy crypto it’s usually with fiat. Governments track their fiat, that’s unavoidable (unless you want to try your hand at money laundering – not recommended). I know that when I deposit money on an exchange, my money has been tracked from my bank to that exchange. The same applies if I use a credit card: they know I am buying crypto. They know roughly how much I’m buying and possibly even when I’m buying it. And that ladies and gentlemen, is as much as they are entitled to know. From that point onwards, I deny them any further information.
Move your crypto wisely
Blockchains are wonderful in that they keep a full transaction history, essentially making them tamper and corruption proof. But this means that once your wallet has been identified, your transactions can be traced from that point onwards. I never send the crypto that I have just bought directly to my cold wallet. I have to assume that the buying process could have been tracked and that they may now be watching to see what I do with that crypto.
Instead I do this:
Exchanges are your friend
There are services that can take your Bitcoin, mix it around with lots of other peoples’ Bitcoin, and then spit out the same amount of Bitcoin that you originally put in, only to another address of yours. I don’t bother with those because an exchange serves the same purpose. Remember: you don’t hold the private keys to exchange wallets, they have their own hot wallets and they just track your balance. Your BTC gets mixed automatically. Were I to just withdraw the same of amount of BTC (minus fees) as I has put into the exchange, then I would become traceable again.
Exchange fee rates are known and fees can be calculated. A team of crypto trackers can deduce that if you put 1.23456789 BTC into Poloniex yesterday, then the person that withdrew 1.23450000 BTC from Poloniex today is probably you. they could flag the wallet that it was withdrawn to and wait for future confirmatory transactions. They could track your wallets for years without you even knowing about it.
What I do is I trade my crypto for other cryptos. They may have followed my 1.23456789 BTC deposit, but are they looking for a withdrawal that’s partly in EOS, partly in DASH and partly in XRP? (Only kidding, I would never buy XRP!) If I then later withdraw any remaining BTC, then it would no longer look anything like the deposited amount.
Unless your exchange sells you out…
Be wary of which exchanges you use. Remember that many exchanges use KYC in order to comply with national regulations. Sometimes you don’t have to do the KYC procedure, but are then prevented from doing certain things with your account e.g. large withdrawals.
I would not use an exchange based in my country of residence or the economic bloc in which I reside. An exchange can deny foreign governments access to records, but it’s own government can compel it to sell you out. Be wary of that. It’s true that governments can team up and work together to nab you, though this is difficult to do and is rare. The exception is within an economic or regulatory bloc such as the EU, where information is shared fairly freely between governments.
Be aware that some ICOs also require KYC. For similar reasons, they could also sell you out to government organisations, so avoid investing in local ones and take note of which wallet addresses you use to transact with them.
…which is why DEXs are such a big thing in crypto
Because a DEX, by it’s very definition, is decentralised. You don’t need a verified account or any KYC, you can trade directly from your secure and (hopefully) secret wallet without ever disclosing your identity.
At the moment we don’t have any wonderful and well developed DEXs yet. I normally use IDEX, though volume on most coins isn’t great and it is limited to Ethereum tokens.
I look forward to the public release of Nash (previously known as NEX) by the City of Zion team as well as Binance DEX. By the second half of 2019 we should have some proper DEXs to use, hopefully they live up to the hype.
[Top tip: you want to hold NEX and BNB tokens, you really do!]
These are another obvious method of keeping your transactions a secret, without having to try to hide your transactions in the depths of exchanges. If you transact using Monero, PIVX, ZCash etc then your transactions will be hidden. For this reason I consider the good privacy coins to be underpriced (all crypto is underpriced, but the privacy coins even more so). Be aware that not all privacy coins make transactions private by default, this is a setting which must be enabled. Get that wrong just once and you throw the anonymity of your wallet address away for good.
Your ISP is another poor man-in-the-middle who your government can compel to sell you out. Unlike an exchange, it’s rather difficult to use a foreign ISP. Make sure that your ISP has nothing on you that government can use: always use a VPN when carrying out crypto transactions. Make sure that your phone/tablet etc also has a VPN if you use it for crypto transactions.
Create an alter ego if you need to speak freely
“Freedom of speech” is somewhat of a misnomer. It comes with nasty conditions.
Believe it or not, my parents didn’t really name me “Bit Brain” (call that a missed opportunity ?). Unlike the man behind the persona, Bit Brain can speak freely about crypto, government regulations and whatever he wants to without having to worry about drawing the attention of the despots in power.
You’ll never find my real name here, my email address, my contact number, where I live, work or anything like that. In fact, I purposefully drop a few red herrings into my blogs, just to ensure that Bit Brain can never be traced back to me with any degree of certainty (no I don’t lie in my posts, it’s more subtle than that).
Bit Brain has his own email address, his own Twitter account, his own STEEM account, his own Trybe account etc. Have you ever tried to get a Twitter account working without a phone number? Not so easy. Which brings me to…
Your phone number
Nobody needs it in the crypto world, ever.
If you are using a common email provider like Google or Yahoo then know that they’ve been hacked so many times that you might as well just post all your emails on a local bus stop or an internet bulletin board. My own Yahoo! account has been compromised before, I should know.
Use a good secure email provider like protonmail to keep your email contents secure. Your data remains encrypted and they’re not going to hand it over to centralised entities. Bit Brain uses mailfence for email, and even they have no idea what his real identity is, but that’s the email address that he uses to sign up with Twitter etc.
Your software is spying on you. Every text message you send, every Gmail you receive. Everything you say in chat applications. Every browser search, every online form you fill in. It’s all being monitored. Not by some government agencies (though they do like to do that too), but by the software on your phone or computer or even your smart TV or modern car. Generally this data is used for marketing purposes – to give you adverts which will appeal to you. Normally you are told that this is done to give you more relevant internet search results… …which is really not the whole truth.
The scary part is that this information can be used for anything, and it is regularly sold between companies (You really should read some of those privacy policies!). Be very careful about what you install, especially on your mobile devices. Be especially careful about what permission you give it. As both Apple and Google are untrustworthy in this regard, I find it best never to use mobile devices for sensitive information. Apple rolls over and hands over your information the second that government even sneezes in its direction and Google is trying to take over every aspect of your life, despite being dangerously and overtly liberal in bias as well as being hacked regularly. Don’t even mention Facebook – it’s a joke.
Microsoft is hardly a paragon of virtue either, but at least a PC is easier to restrict and control than a phone (if you know how). Even then, hardware manufacturers have also been known to conspire against you – hard drive manufacturers in particular. But unless your name ends in “Bin Laden” it’s unlikely that governments will go to the effort of tracking your 0.1 ETH deposit transactions using such methods, they’re designed more for matters of national security.
All of what I have said so far means absolutely nothing if you yourself are the weak link in the chain.
If I go onto my Instagram account and say “lol, I’m the guy who types the Bit Brain blog” then I’ve done all this effort for nothing. If I go onto a Facebook crypto group and say: “I’ve just deposited 1.23456789 BTC on Binance, I’ll be buying TenX with it”, then you might as well just give the government your API keys. There is no such thing as “private data” on social media. Ever. If you really feel the need to pass sensitive information via social media then at least encrypt it. I would suggest rather using encrypted email like Protonmail, but in either event, make sure you send the decrypting key to another party by a secure method. Preferably break it into two or more pieces and send them by different methods. I recommend VeraCrypt for sharing encrypted data.
Never openly speak about your crypto holdings publicly, whether in person or on social media. Nobody needs to know that information and all you do is make yourself a target. In fact: never brag about any wealth – period. I know that some cultures encourage it, especially the Americans and some of the oil rich states of the Middle East; but to do so is as silly as it is crass. Just don’t do it. If you’re driving a gold Lambo with the license plate Bitc01n – then you’re just asking for trouble.
Keep your trades to yourself, your wallet addresses to yourself and how much you hold to yourself, especially if you hold substantial amounts of crypto. I don’t hold substantial amounts of crypto because as much as I would like it, I simply don’t have a typical first world income. Even so, you’ll never see me saying “I have X amount of BTC, Y amount of ETH and Z amount of NEO”, even when using my Bit Brain persona. That way even if I ever am linked to my alter ego, I still haven’t given away enough information for anyone to act upon. Percentages are fine, they’re actually useful. I can tell you “I hold 10% of my crypto in coins with a market cap of less than $5 Million” – for example, or: “I hold 10% of my crypto portfolio in BTC” – rather do that.
There is more to this topic: you can open bank accounts as an Estonia e-resident, you can move to Malta, you can incorporate your business in Liberland. You can also mix and match the ideas above, use different exchanges, use an array of different wallets etc. Don’t stop your research here, also try to stay on top of the latest developments. If you have questions, you know who to ask – I’ll help wherever I can or I’ll tell you if I can’t.
I leave you with this parting thought copy and pasted from: https://www.biblegateway.com/passage/?search=Matthew+22&version=NRSV
The Question about Paying Taxes
15 Then the Pharisees went and plotted to entrap him in what he said. 16 So they sent their disciples to him, along with the Herodians, saying, “Teacher, we know that you are sincere, and teach the way of God in accordance with truth, and show deference to no one; for you do not regard people with partiality. 17 Tell us, then, what you think. Is it lawful to pay taxes to the emperor, or not?” 18 But Jesus, aware of their malice, said, “Why are you putting me to the test, you hypocrites? 19 Show me the coin used for the tax.” And they brought him a denarius. 20 Then he said to them, “Whose head is this, and whose title?” 21 They answered, “The emperor’s.” Then he said to them, “Give therefore to the emperor the things that are the emperor’s, and to God the things that are God’s.” 22 When they heard this, they were amazed; and they left him and went away.
Give your governments their fiat money if they want it, but don’t let them near your crypto – they had no part in creating it, it is not theirs to take! And if you’re that way inclined, then remember to thank the good Lord above for giving you the wisdom and opportunity to get into crypto in the early days – that will prove fortuitous in times to come.
Yours in crypto – never in fiat
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”
~ John Maynard Keynes