Bitcoin mixer is a service that lets someone mix their coins with other users so that they can retain the privacy of their transactions. Another term that you might come across is a cryptocurrency tumbler.
Staying anonymous in the digital world is extremely tough. You leave footprints everywhere, right from the services you use to the pages you visit, and even the tools you rely on collects a lot of information that can be traced back to you. A similar thing is with bitcoins.
When we hear the term bitcoin, it reminds us of anonymous transactions. It is a cryptocurrency which you store in a wallet. Now wallets have their address. So you can actually tie bitcoins sent from one wallet to another as a transaction. And in the process of doing so, there are chances that someone could even link a transaction back to you. Plus, each and every transaction that happens on the Bitcoin Network is available in the public ledger, so there’s no escaping.
There are advanced techniques like Blockchain analysis to tie addresses to its owner. Now, if you are trading bitcoins through an exchange or withdrawing it, then its quite a possibility that you have gone through the KYC procedure to open an account in the first place. That’s another pitfall where your identity gets exposed.
But what if we tell you that there’s actually a way to make your transactions anonymous while paying for some service or doing whatever business you want. There are different ways to go on about achieving this. Among those, we are focusing on the concept of Bitcoin Mixing. In this segment, we will explore a bit on What is Bitcoin Mixer and its functioning.
What is Bitcoin Mixer and How it works?
Bitcoin Mixer is a concept of gathering bitcoins from multiple sources and distribute it to the destination. It does this by swapping Bitcoins of the same value from other wallets, or it makes temporary addresses to do this. So the end result would be bitcoins being sent to the destination without getting linked to its original source.
Mixing of bitcoins will break ties between the source and destination. To explain to you in a more straightforward way, Suppose there’s a big jar and everyone puts 1coin in it. After that, others take out one coin from it. So now, the probability is your coin can be with anyone.
This was the most basic concept to give you an idea about a Bitcoin Mixer. Over the years, people have identified many flaws with these procedures, and the number of other solutions is developed. There are centralized mixers where users have to trust the mixer and also different kinds of trustless concepts and even the lightning payment styles network channel.
Some of them even include Monero or Ethereum (another cryptocurrency) as an extra step that guarantees more privacy. But of all them, let’s stick to the most common ways that Bitcoin Mixer works.
Centralized Bitcoin Mixer
There are many types of centralized mixers. Since we are interested in bitcoins, let’s just stick to that part. So in centralized mixers, you pay in different other crypto coins, and in return, they give out bitcoins to your desired destination. There are two major issues concerning such kind of mixers.
- First is, you need to trust the Mixer service to keep your identity secure. Here as you need to specify the delivery address, the service owners can know exactly about what did you purchase or the transactions can be tied back with you. So the privacy of a user is always in question with Centralized Mixers.
- The next big thing is a trust issue. The people who run such services are generally anonymous. There’s no guarantee of such a service to be legit. There are high chances that you get scammed by a centralized mixer in giving your coins and having nothing back in return.
But since people started becoming sceptical of such dummy services, there happens to be a significant upgrade in the process where it becomes more robust. Let’s see how.
Two eliminate the two major issues we just discussed in centralized mixers, a modern version of it was created. Here a group of people agrees to send their bitcoins to a particular address, and then from there, it gets distributed further to their desired destination. So this process is directly embedded in some anonymous wallets and exchanges.
Here, such mixers are designed so that even the entity responsible for merging the transaction wouldn’t know where it came from. Thus, eliminating any privacy threats that users might have while using bitcoins.
In the next part, we mention some of the honourable services that have gained a user’s trust and stood responsible for delivering the desired results.
What are some Bitcoin Mixer Services?
Again clarifying, we do not endorse any of these services. Do our homework, read reviews over the internet, check scam advisor, Reddit, and other places you know of before investing.
MyCryptoMixer is probably one of the best mixing services available. It provides you with an intuitive user interface. Here you enter the destination address, select the strength of mixing, set delay time, and start with the transaction. It will automatically mix your coins with a pool and then deliver the amount to the destination wallet.
Another excellent service is the wasabi wallet. It is an opensource desktop-based wallet service that comes with an in-built CoinJoin mixer. It is by architecture, a centralized entity. Still, it is smart enough to keep its users privacy that no third-party, including them, can deanonymize anyone, which is a good sign.
If you are not a fan of desktop-based wallets and want to go mobile, then Samourai Wallet is the right choice. It has a feature named Whirpool, which basically is a conjoin. Additionally, it provides more privacy-related features such as Stealth Mode to keep the app safe, Stonewall to remove any unwanted trails of transactions, etc. Do explore it once to get a clear idea of how it all works.
Is it safe to Mix Coins? Or Is it Legal to Mix Coins? Do you risk getting a ‘Tainted’ tag on your wallet or bitcoins if you use a Mixer?
Answering the first question of safety while mixing bitcoins, it sure is safe given that you use a legit service and keep your guard up to stay anonymous even while signing up or accessing it. Some of them also support TOR proxy integrations to guarantee user anonymity. Coming to the part of legality depends on your countries law. For example, in India, it is entirely legal to trade in bitcoins but is often seen as a crime for some reason, which isn’t pretty clear. So be very sure to check your country’s law before investing.
Now getting to the part where you risk getting your bitcoins labelled as tainted, let us see how your bitcoins can be labelled that way in the first place. So for bitcoins to gain that label, it must be gained by doing some fraud or illegal activities. As we can see in the recent exchange hacks, whatever the addresses were involved are blacklisted by several exchanges around the globe. But in the case of Mixers, there’s no such case till the date where an exchange or a service refused to accept those coins.
It is evident that you can spot if the bitcoins you are trading are mixed or not as the trail it leaves behind while scrambling becomes quite visible. But again, it’s completely impossible to identify the owner in such a case.
Staying anonymous while dealing with bitcoins is one thing that you must look after. If your identity does expose, then you reveal too many things to everyone. How you spend money, something you buy, the total bitcoins you own, and other things that must be kept private are readily available in the public domain. Be very sure before committing to any bitcoin transaction and stay safe. Do let us know what Bitcoin Mixer services do you trust in the comments section below.