Most of us will have at least heard of the term cryptocurrency and as we progress into an increasingly digital age, we are beginning to see the way we buy goods and services evolve at a rapid rate.
Cryptocurrencies are essentially digital currencies and these include the Bitcoin, Digibyte and Ethereum products. If you’re looking to purchase these online and get in on the crypto-craze, then there are some things to think about before you do so.
What is a Cryptocurrency Exchange?
Essentially, a cryptocurrency exchange is an online marketplace where you buy and sell cryptocurrencies from other individuals, traders and businesses. More and more people are beginning to use these platforms to purchase their very first cryptocurrencies.
While this activity presents its own individual risks, there are plenty of things to consider before you get to the stage of purchasing for the first time. Being able to identify and verify yourself before purchasing is probably going to be mandatory.
Why do you need to Identify and Verify?
When you use a currency exchange there is every chance that you will be asked to identify and verify your identity. This is for a number of reasons that include serious issues such as money laundering and fraud. Indeed, technically, cryptocurrency exchanges can be used for money laundering. Most of the more prolific exchanges will ask you to follow and identity and verification process for these reasons.
Due to the high financial element of these marketplaces, they have become a target for cybercrime and those wishing to launder dirty money. Being able to identify yourself and verify your identity can allow you to gain complete access to the market and allow you to begin trading but how exactly can you do this? Luckily, most marketplaces will offer some fantastic technologies that will make this process simple to complete.
Integrated Technology on Cryptocurrency Exchanges
Some of the bigger platforms such as Coinbase use technology such as that provided by Cognito and this will basically do all the hard work for you. These technologies will allow you to take a picture of your ID with your smartphone, tablet or computer as well as a portrait-style picture. This allows for the bigger exchanges and marketplaces to identify and verify their customers almost instantly allowing you to start trading promptly.
We would argue that the vast majority of platforms will embrace the principle of KYC (Know Your Customer) and require you to identify and verify; only then will you be able to start trading effectively. Some people will have issues with giving out such info and you may be required to present it again when trading with some individuals.
When the whole KYC process is completed, then you’ll be able to buy and sell cryptocurrencies.
Takeaway
Be sure to read the T&Cs on some exchange such as Coinbase carefully. If you’re not comfortable or don’t agree with the requirements, you may want to find another exchange. HitBTC, for example, doesn’t require you to identify and verify; but for how long they allow customers to do so, only time will tell.
As mentioned above, you’ll eventually need to provide your personal identification information, even though the exchange you want to sign up with right now doesn’t require you for doing so today. It’s recommended that you prepare what’s required for the KYC process, so that when the exchange eventually limits your transaction capabilities you can easily comply with the updated T&Cs.