Quote from: peterpan2k on July 25, 2020, 01:13:30 AM

Hey guys/gals, maybe I'm too dumb to understand how BC really works, but I just signed-up on a BC site and before I can purchase a few coins, I was asked for all my REAL information, including last 4 of my SS#, address, and even a bank account to link my BC account to! So I'm scratching my head, "how can this be anonymous" they know everything about me and if I buy anything using that BC account, I just opened, it'll be just as transparent as buying w/ cc lol. Again please forgive my ignorance, but can someone briefly explain how can any transaction from a BC account be anonymous, if they collect every piece of information about you before allowing you to open an account! Thanks!

Yeah, keep in mind there are multiple kinds of wallets you can create. There are Exchange wallets, hard wallets and soft wallets.

Exchange wallets as you saw ask all kinds of questions about who you are, this is because in order to operate in any given country they need to comply with said country's legal framework.
Upsides: you get to trade against your FIAT of choice
Downsides: no access to private keys, the coins you hold here are not "truly" yours, and they can always just run with your money.

Hardware wallets are things like Trezor which are devices that hold the private keys of your wallets for you, they're easy to conceal and keep safe (like, in a safe) and all information within is encrypted with your password so it's hard to break into them without your passwords.
Upsides: increased security, you can always recover your wallet if you enter y our private key on any other wallet provider.
Downsides: you can't really trade against fiat unless you know someone who is selling, that you trust, that you can send your coins to.

Software wallets can be broken in two: full nodes and client wallets, full nodes are unpractical at best, recommended for people who run mining operations or large amounts of any given currency because they need to be connected to the internet and up to date before you're able to send your money away from them.
Upsides: increased security, shares the above one upsides, but has more potential ways to secure your funds.
Downsides: requires a more expensive set up, also same as above.

Now client wallets are things like Electrum or Jaxxx or others wallet providers that connect to a given node to get the blockchain information, these can be encrypted like the previous two but is not necessary.
Upsides: increased security compared to exchanges as you can export your private keys or mnemonic phrases to back up in case you lose your device.
Downsides: same as trezor hardware wallets, can't really sell to FIAT unless you know and trust someone who accept payments in crypto directly.

This is very generalized information, I personally make use of the 1st and 4th wallet above (exchange and client wallet), whenever my exchange wallet gets too fat (anywhere north of $1.5k) I transfer over to my client wallet, unless I'm actively trading I never keep more than that amount on any exchange at a time.

Hope this all helps!

conhela

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