What Data is Collected When Buying, Selling, and Using Crypto?

When it comes to buying, selling, and using crypto, two topics are often discussed: regulation and data security. With trillions of dollars in cryptocurrency changing hands yearly and several accounts managed by people worldwide, a lot of data is being traded, too. 

However, that’s not stopped the crypto market from heating up. In fact, crypto expert Kane Pepi notes that investors are constantly searching for the best new coins to purchase and sometimes, with so many options in the market, it can be overwhelming (source: https://www.techopedia.com/cryptocurrency/best-crypto-to-buy). 

But, with good guidance, investors continue to buy, sell, and trade new and established digital currencies. As they do, they are also sharing information, which leads many investors to wonder about what data is collected whenever crypto is bought, sold, or traded. 

If you find yourself in a similar bind, we have the answers. Below are some data types you may or may not be sharing when you trade or use crypto and why. 

Personal Information

How much personal info is shared depends on whether you choose to use a centralized or decentralized exchange. 

Identity Verification

Centralized and Decentralized exchanges take unique approaches to confirming the user’s identity. Centralized exchanges might collect Know-your-customer (KYC) information and have Anti-Money Laundering checks in place that require you to provide a valid means of ID, such as a Driver’s license, Passport, or other valid documentation. Decentralized exchanges, on the other hand, furnish the account user with a set of seed phrases that are unique to every account and can be used to access or retrieve the account.  

Contact Information

Centralized exchanges also collect contact information like your home address, website address, and phone number so that they can develop a database, post relevant mail to your home address, and keep you updated on their services with the occasional scheduled mail. Decentralized do not ask for this information, which is why they are preferred by people who want to access crypto discretely and leave no online footprint when using services like their favorite anonymous casino. 

Transaction Data

When you buy and sell cryptocurrency, your transaction data is being recorded for keeping sake and also to allow you later access other service offerings usually depending on how much you use the platform. The following are some of the data types recorded by centralized exchanges:

Deposit and Withdrawal Data

Decentralized exchanges only allow deposits in cryptocurrency and not fiat. Because they do not collect personal and KYC info, they are non-compliant with many state and federal laws, which is why they do not have the fiat option. On the other hand, centralized exchanges are able to collect user data, allowing users to send and receive cryptocurrencies in exchange for fiat currency on their peer-to-peer (P2P) networks. This requires users to provide their bank information, such as their bank name and routing number. Many centralized exchanges also allow users to withdraw and fund their accounts from popular eWallets like Apple Pay, Google Pay, PayPal, and CashApp, to name a few. 

Trading Activity

Some exchanges also record users’ trading activity when they trade or use cryptocurrency. This serves a dual purpose for the exchange and the account holder.

It allows for easier reporting of all the activities carried out on the exchange for stakeholders and investors, so the exchange’s progress can be measured at one glance. This is also handy when an external party is auditing the company. 

It allows the user to quickly recall all their transactions on the platform so they can make informed decisions based on previous data. Also, in the event that they want to appeal a transaction or need clarity, the record serves as a trustworthy reference for all invested parties to call upon. 

Device and Usage Data

Some crypto outfits will collect your device data for a number of reasons. The following are some of the usual suspects and why:

Device Information

Most of the time, this is done as an added security feature to protect your money and your account. If you have paid attention, sometimes you’d notice that when you log in to your account with a new device, you will get a mail or notification on your mobile not only informing you that someone is trying to gain access to your account but go ahead to include the phone’s manufacturer and model. This is done so you don’t mistake any of the logins for your own in case you are trying to log in at the same time. 

IP Address

When researching online anonymity, this is one entity that is nearly guaranteed to make an appearance. Considering how important location data is to Google searches, many unsavory actors willingly break the law to access your IP address, which allows them access to your online profile or sell your data to companies that then spam you with targeted ads. 

Is it in your best interest to have this data collected? 

First off, there’s a chance you have no say in the matter. It’s likely that when you clicked yes on the terms and agreements on sign-up, you already agreed to share this information. Secondly, you share your IP address with pretty much all other websites on the internet. The IP address is so-called –an address– because it points to the server exchanging data with you on your device. 

While you have to tender an IP address, you don’t necessarily need it to be yours. You can use a Virtual Private Network (VPN) service, which replaces your IP address with one of theirs, basically conferring some anonymity to your online experience. It is for this reason—the fact that you can change your IP address—that many crypto companies that allow users to trade and use crypto collect IP addresses. 

Cryptocurrencies are both heavily regulated and under-regulated, depending on the region. As a result, these crypto companies risk their licenses if they provide their services in regions where crypto is banned. They collect IP addresses to ensure they stay on the right side of the law. For the same reason, most of their systems block the use of VPNs. 

Additional Data Points

Other than personal information, banking information, and your device data, the following are some other data points that crypto companies sometimes collect.

Social Media Data

Sometimes, your social media account can be requested when creating your account. It serves as an extra verification source. The system can quickly crawl your profile to confirm if the data you provided on the sign-up tallies with what’s on your social media profile. Also, it gives users the option to log in with their social media instead of using their mobile number or email address, considered by many to be a safer option. 

Activity Logs

Another security measure is that some companies may keep a log of everything you have done and are doing on their platform. This includes your successful and unsuccessful login attempts, a record of conversations with the support team, and a history of browsing the platform. 

Conclusion

When buying, selling, or using cryptocurrency, the amount of data and the type shared depend on whether you use a centralized or decentralized exchange. Expect to share some of your personal information, transaction data, device information, social media, and activity logs on the platform. 

James Ewen

James is the head of marketing at Tamoco