Or are there countries where IDs and maybe phone numbers are required before making purchases physically? Imagine how strange it would be to present your ID before buying or selling in physical world. Not sure I've ever been required to present ID before buying or selling, even physical foreign currencies offline. The kyc phenomenon seems to be peculiar to online world and bank transactions.
I think human right to privacy shouldn't be violated in anyway unless the human is involved in serious crimes or some suspicious activities. And even when ID becomes necessary, it should be handled with care to prevent it from going into the wrong hands.
By the way, the kyc issues could make thriving online economically alot difficult for people in certain remote places who probably prefer to have little to zero contact with modern world. This are the kind of people crypto would be more suitable for, unfortunately they will be denied access to lots of cryptocurrency exchanges in existence today.
With certain purchases, yeah, ID is required here. Not with daily groceries or anything like that, but with gambling, or buying stocks, cryptos etc. But it's coming more and more mandatory. Probably not with groceries and small purchases, but for expensive stuff it's coming for offline as well.
And reason you haven't asked kyc before is that regulations on that are changing rapidly. In 2016 no one cared if someone holded crypto, and kyc wasn't a thing in most places.
But about your second sentence: How would you know that person who is buying hasn't been involved in crimes or suspicious activities without kyc:ing them?