A new warning to LocalBitcoin users that they are not advised to visit the site through the Tor network follows after LocalBitcoins implemented KYC/AML requirements on the platform, further distancing itself from its privacy-conscious past.
Warning to all LocalBitcoins users: LocalBitcoins requires KYC and monitors all transactions.
Meanwhile, the Bisq P2P network is 100% routed over Tor to protect the privacy of all its users. To accept a trade offer your computer connects directly to the maker’s computer over Tor https://t.co/2P5BOMlsY4
— wiz (@wiz) September 9, 2019
The ‘warning’ message appears to users as a reminder that if they visit the website via Tor, the tool for enabling anonymous internet browsing, they face an increased risk of having their coins stolen, without specifying why users are at a greater risk. The screenshot was supplied by Richard Bensberg, a transaction compliance expert, who criticized the message by saying that the peer-to-peer exchange has “‘really lost the plot’ by putting a banner warning against the browsing tool praised for providing privacy and anonymity”
LocalBitcoins was formerly an open P2P exchange that allowed users to buy and sell Bitcoin anonymously, however recent events have caused LocalBitcoins to implement more KYC/AML compliance requests from customers. Conversely, as the tweet points out, other services like Bisq do not impose such identity requirements, giving privacy-conscious customers a reason to switch.
Exchanges serve as the industry’s bottlenecks
Because of cryptocurrency’s early stage in the adoption phase, the primary means to acquire/sell remains through some form of exchange by using fiat currency, rather than by receiving/paying cryptocurrency as money for goods/services. As such, regulated exchanges have become bottlenecks in the sector, and the implementation of KYC/AML gives privacy-conscious consumers few alternatives depending on their local liquidity, regulations, and desired cryptocurrency. LocalBitcoins remained a mainstay of the
Cryptocurrency is naturally permissionless since anyone can download a wallet and start using the technology, though acquiring through equally permissionless means remains a challenge. However, alternatives do exist, such as Bisq, a decentralized peer-to-peer trading client which supports Dash and does not require AML/KYC documents. Other Dash-supporting P2P exchanges include Wall of Coins, CoinCola, bitcoin.de, bitalo, and others. More Dash ATM options, such as IQ CashNow, CryptoBuyer, CoinLogiq, have been added recently, and many do not impose identity requirements.
The need for speedy settlement with P2P exchanges
While trading via P2P methods, such as the need LocalBitcoins formerly filled before KYC requirements, increases decentralization and preserves privacy over the use of centralized an regulated exchanges, it does carry with it extra risks. An important attribute for individuals conducting P2P exchanges, especially if its face-to-face, is speed since neither the buyer nor seller can afford to wait for extended periods of time for transfer of funds to be confirmed. Dash fits this requirement nicely with InstantSend, that now automatically settles every transaction instantly, which are then instantly respendable. Consumers can exchange cash for Dash, locked into their wallet, within seconds. Additionally, Dash’s other recent innovation, ChainLocks, provides further confidence that the transaction cannot be undone and funds are not as vulnerable to theft. These innovation help individuals rely less on trusted third parties conducting the actual exchange and empower them to simply need a tool to find each other and can then conduct the P2P exchange themselves.