Bitcoin and altcoins have a reputation for being the ‘anonymous’ way of making transactions on the Internet. However, when people enter the world of cryptocurrency and sign up for an exchange to buy some crypto, they quickly find out that they have to go through a very thorough identity verification process.
So what is all this about? While it’s possible to perform transactions on many cryptocurrency networks anonymously, there is still an ID verification process to buy bitcoin on many of the larger exchanges. Here we’ll explore why this ID check is necessary, and how to make sure you can pass safely on various Bitcoin exchanges.
What is identity verification?
For many of the larger cryptocurrency exchanges like CEX.IO and Coinbase, ID verification is an essential step you need to make before you can take advantage of the complete set of features on the platform. Especially it concerns depositing and withdrawing funds.
Verification usually has multiple steps. The first is preparing your government-issued ID card. Passports, ID cards, and driver’s licenses will do the trick. The next step is often to take a photo with the documents. Usually a selfie with your face alongside your IDs. You’ll often be asked to hold a hand-written note in the picture as an extra layer of confirmation.
After that, you may have to do some sort of address verification. This means uploading a document that proves your current residential address. Something like a tax return, bill, or recent bank statement will do the job.
The exact process changes from exchange to exchange. Here’s an example video guide to the ID verification process for the CEX.IO exchange.
Why is it necessary?
It’s possible to trade with many different cryptocurrencies anonymously online without verifying your ID at all. However, if you want to pay for cryptocurrency with your credit card or withdraw funds to your bank account, you’ll need to tap into the traditional mainstream financial system. This means following the normal regulations that banks have to follow such as Anti Money Laundering.
It’s an industry standard for centralized cryptocurrency exchanges to identify each of their customers this way. It helps them to keep users safe from malicious users, allows them to get insurance on the funds kept on their servers, and operate lawfully in heavily regulated areas such as the US and Europe.
Can I skip ID verification?
If you’re wondering if you can pass it buy, think again. If you want to use the big brand name exchanges, you will need to go through this verification process. Read to the end to hear about some alternatives that don’t require identity verification.
At the end of the day, identity verification allows exchanges to offer benefits to users such as a more secure trading environment, a smoother trading experience, and the ability to transfer funds to and from the mainstream financial system. That means you can buy Bitcoin and other cryptocurrencies quickly and easily with a credit card and bank transfers. It also means you can cash out your cryptocurrency to your bank account when you want to.
How to pass cryptocurrency exchange verification
The way to pass cryptocurrency exchange’s verification is to be honest and to follow all of the steps properly and carefully. Use a good camera that can take high-quality photos (good enough to read the small print on your ID card).
Always check if you meet at least the minimum requirements to use the exchange before you begin. You don’t want to spend a lot of time preparing documents and taking photos only to find out you’re eligible to use that particular exchange.
Leave yourself a solid few days to weeks for your account to be fully verified and ready to buy and sell crypto. Sometimes there are queues for verification, and sometimes things go wrong. It’s all are parts of the process.
Photo checking is usually done by humans, so it would be very difficult to try to ‘trick’ the system. It’s a very bad idea to try to game the system, anyway. You could find yourself unable to withdraw your funds further down the line if your account is found to be unverified.
Things to be aware of
Always be careful when uploading your identity documents online. Your personal information is extremely valuable and identity theft is a common problem on the internet these days.