One of the terms that have also become quite frequent in the cryptocurrency world is the term KYC or Know Your Customer. Glossary KYC (Know Your Customer) In a simple term KYC is when a crypto exchange requires you to prove who you are so before they can grant you full access to their platform. This mostly requires giving personal information such as full name, date of birth, residential address, and a government issued ID card like a voter card, driving licence, national identification or international passport.
Other exchanges would even request a selfie, or a brief video to prove that you are yourself in the papers. Although crypto is regarded by many as an area where one is free of the influence of banks and governments, KYC is a significant aspect of ensuring that space remains safe.
Fighting crime and fraud is the primary explanation of why KYC is important on crypto exchanges. In the absence of KYC, various scammers and criminals will be able to open unauthorized accounts and perform criminal actions without the possibility of reaching them. They might employ these accounts to launder money, take other people's money, or invest in risky behaviors. However, where a strong KYC process is done on an exchange, every person who attempts to engage in fraudulence can be tracked down and hence the authorities informed.
This complicates the task of bad actors to masquerade in the crypto arena. KYC would also safeguard good users against identity theft. Imagine what would happen in the situation when someone creates an account under your name and commits crimes with it and you may also get into trouble because of something that you did not commit. That is avoided with the help of KYC that allows each account to be owned by its rightful owner.
To the Nigerians, KYC is particularly pertinent. We have one of the highest crypto users in Africa and most of our citizens either use crypto to trade in, online business, sending money to relatives or investing. However, online scamming, counterfeit investment websites, and scammers also preying on innocent citizens are also present. It is as a result of this that the Central Bank of Nigeria and other control entities are monitoring the activities of crypto.
Failure to undergo the necessary KYC measures by a crypto exchange makes the exchange vulnerable to government interference resulting in quick shutdowns of the exchange to the detriment of the users. On one hand, the simply done exchanges with correct KYC have better chances to remain in the business and be trusted by customers and authorities.
Honest traders also get personal advantages out of KYC. In case you get your account hacked, the exchange will be able to verify you by your verified information and grant you back access. Some also elevate the withdrawal limits and deposit limits of verified accounts, enable more functionality, such as peer to peer trading or fiat deposit and also offer faster customer service response times to accounts that have been through KYC. That is, not only does your KYC provide added security and convenience to you, it also protects the exchange.
Nevertheless, others are concerned about privacy concerning KYC. They have the fear that their personal details will be stolen in the event of a hack of the exchange. This way is not fake; this is why it is necessary to adopt exchanges in which there are decent security considerations, including encryption, two-factor verification, and secure servitors.
It is important to understand that the platform you are depositing your KYC information on should be reputable with good policies about where your data is held and what it can be used to do. One should not give out her files to anonymous websites and people because it is likely to expose them to the risk of identity theft.
KYC in crypto is going to most probably be even more significant in the future as more individuals enter the market, and the government's provisions that will be made regarding the digital assets. We might even find novel technology such as digital identity systems, where there is a single secure and verified identity that can be trusted in various exchanges and no longer the uploading of your papers time and again. This may make it quicker and safer and still be legal.
Conclusively, KYC is relevant in cryptocurrency exchange markets due to its ability to make the environment safer, generate confidence, defend users who are on the right side of the rules, as well as ensure legal compliance to the platforms. It makes Nigerians much safer against fraud, account security and that the exchanges that we trade on will not be blocked by the government at any time.
The benefits of KYC: Although raising concerns about privacy is understandable, these concerns are considerably out-numbered by the advantages offered by KYC in terms of security and trust. KYC at the end of the day is not merely following the rules, it is about self-protection and making the crypto space a place where... where honest people can.