Don't use Coinbase. Coinbase are coin nazis
Coinbase will ban you if they find out that you're using bitcoins purchased from them for online gambling, purchasing drugs, peer-to-peer (p2p) trading or buying backpage credits (bitcoin is mostly used on backpage to place paid escort ads. Backpage accepts fiat currency for other types of ads). They do a taint analysis on "your" coinbase wallet to find out where your bitcoins are going. They will also ban you if you send your coins to a "mixing"/"tumbling" service. Similarly, if they determine from their taint analysis that you obtained bitcoins from a "shady" source (ie. gambling site, darkweb, etc) or a p2p trading site, they will ban you.
I have also seen Coinbase randomly ban someone and lock their coins for thinking they were posting from Iran even though the individual lived in the United States, was born in the United States and wasn't Iranian at all. It's possible that maybe the person used a VPN or TOR and he just happened to be given an Iranian IP at one point. lol.
Coinbase's stamp is also higher than a bitcoin exchange even though they charge fees just like a bitcoin exchange does. Only difference is that coinbase's fee structure is more oriented towards smaller purchases whereas bitcoin exchanges tend to encourage customers to do bulk orders.
If you want to buy bitcoins without much hassle, don't give coinbase/coin nazi your business. Go to www.localbitcoins.com or www.paxful.com and buy from bitcoin traders like myself. Mycelium Local Trader is a great option too for local trades or if you don't mind buying bitcoins electronically without escrow protection (without escrow protection you should buy from traders that you know you can trust. Like me. lol).
If you want to become a bitcoin trader, don't buy from coin nazi. Buy from a bitcoin exchange or buy p2p. Mine your own coins if you have access to cheap electricity where you live (sadly I don't. I am purely a re-seller for this reason).
Background information on author: I am a peer-to-peer bitcoin trader and day trade bitcoin. I have been doing this for 2 1/2 months on and off and got into trading more seriously in the last 4 weeks.
Thank the government for that. If they want to operate the have to follow the laws and the KYC laws require them to do this. Just send to a personal wallet first.
Admittedly I'm not an expert when it comes to blockchain technology. I just buy and sell bitcoin. That's what I know. But if you send coinbase coins to a personal wallet first before sending to a gambling site or whatever, I think that this will still show up in the "taint analysis". When I've done a "taint analysis" of some of my wallet addresses, there are a ton of links there. It's surprising. It just won't be as obvious to coinbase what you are doing compared to just sending coins directly to those kinds of sites.
I really don't think it's just the KYC stuff with coinbase though. Kraken and Gemini are both based in the United States and they're not as strict as Coinbase. I trade on Kraken and I never got in trouble there for selling on Localbitcoins and Paxful like you would with Coinbase. Though I haven't bought drugs, gambled, bought backpage credits or did any of that stuff with my coins from Kraken so I'm not sure how they feel about that. Do so at your own risk.
If you're going to be gambling, buying drugs, buying backpage credits, etc. your safest bet is probably to buy p2p. Localbitcoins, paxful, Mycelium Local Trader, etc. And it's probably best not to disclose to the bitcoin vendors on there that you are doing anything illegal with your bitcoins. I have had customers in the past admit to me that they are buying bitcoins for backpage. One even told me that she works at a spa. And we all know what goes on in there. lol. You're not paying for a RMT when you go to those places. You're getting a handjob with a happy ending at the very least. lol. And while some customers haven't told me what they were doing, it was obvious they were prostitutes, buying drugs or gambling (online gambling is legal in my country at least). I don't judge.
Most p2p buyers I'd estimate are doing something illegal with their bitcoins or gambling. Prohibition doesn't work. Drug addicts, gambling addicts, sex addicts who blow all their money on hookers, etc. need to seek professional help. But I don't see anything wrong with drug use, gambling and prostitution in moderation and (some libertarians/ancaps are going to hate me for this) with proper regulations in place.
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