The Truth About KYC and Your Privacy in Crypto

People cannot mention cryptocurrency without mentions of freedom. The concept of crypto is that you do not have to make the bank or the government monitor you wherever you go while sending and receiving money. However, with the rise of crypto, there were demands regarding something known as KYC by governments and exchanges. KYC means "Know Your Customer." It is a process by which you are expected to give your personal details, such as your name, ID card, address, phone number and even a video of your face before you can transact and withdraw money.

Initially, I did not think much when I heard about KYC because I assumed that it is just a mere process, such as opening up a bank account. However, as I started to learn more, I discovered that KYC in crypto puts large questions on privacy, freedom, and even safety. Other individuals who got into crypto did so due to the expectation that they would be in command of their own money. However, it is no longer a dream because KYC has become ubiquitous.

Fighting crime is the primary aim of governments pushing KYC. Criminals use crypto to launder their money, fund terrorism, and scam, they say. Gathering data of people, they are sure that bad actors will not be able to remain under the water. This would have been an excellent idea on the surface. No one would like crypto to become a haven of thieves and fraudsters. The issue is that it is not only criminals, who are impacted by KYC, but every single citizen, who may simply want to use crypto to perform ordinary purposes.

By providing your own personal information to a crypto exchange, you are relying on them to protect your information. But we are all aware that hacks do occur. Even major corporations with high security are hacked and the information of people is stolen. Just imagine that you post to an exchange your national ID, bank details, and face picture and, the next day, hackers post it online. That can be a life threatening move in a country where fraud and identity theft are already the order of the day like in Nigeria. I have heard of numerous Nigerians who are scared their data might be leaked, and someone might open a fake account in their name or commit crimes.

Image Source

Surveillance is another problem. Under KYC, any transaction that you conduct in that exchange can be linked to your identity. It implies that you are not as privacy conscious as people were initially lured to crypto. It is virtually identical to the usage of a bank account where each naira that you transact is followed. In my case, it is like retrogression rather than progress.

Still, it is not all negative. KYC is associated with certain benefits as well. As an illustration, trading with KYC is normally trusted by more individuals. They usually trade higher volumes and in some cases, they offer customer services in the event of failure. Provided that you are hacked in your account, a KYC exchange can authenticate you and restore your money. In the absence of KYC, you can barely demonstrate who you are in case there is a hitch. To some extent, therefore, KYC provides a little protection.

The actual fact of KYC and privacy in crypto is compromise. Governments desire control on the one hand. On the other hand, individuals desire freedom. The dilemma lies on the issue of how to enable crypto to expand without making it another banking system. There are those who think that the solution lies in decentralized exchanges (DEXs) due to the ability to trade without any personal information. Even these are not without pressure and some are soon to be compelled to include KYC.

Individually I believe that all Nigerians using crypto should know the risks and benefits of KYC. It does not simply mean that you need to press the button called submit when a transaction requests your ID. It is a question of determining whether you can trust this platform with your data or not. Is it necessary to make use of this exchange, or is there a less risky means? I have now understood that I can only provide my information to websites with a good track record in safeguarding users.

To sum up, KYC in crypto is a two sided sword. It offers sanity and security, and at the same time, it removes privacy and the chances of data leaks. Crypto was supposed to empower the people with too much KYC and that dream is gradually dying. In my case it is plain that the truth is KYC might be inevitable, but we should be keen and prudent in our approach to it. We need it in order to be free and safe.