But then, there are other small details that can reveal your actual identity. The address of your Bitcoin, for example, is public. Your history of transactions can also be discovered. If you are not careful, they can be put together and may reveal your real life identity. Discovering who you truly are is not of great interest, unless you deal with high amounts of money.
Most people would try to conduct transactions in a confidential manner. Indeed, this will help. But at the same time, Bitcoin users should be aware of the fact that you can add an extra layer of anonymity to your transactions. You can get a bit more privacy regarding your real life identity, regardless of how much money you have in your wallet.
This is when the Bitcoin mixer kicks in – also known as a Bitcoin tumbler. What does it do? How does it work? What are the best tumblers on the market? Here is everything you need to know.
So, what is a Bitcoin mixer?
Mixers, shufflers, tumblers, blenders – they come with different names, but they do the exact same thing. These modern solutions allow you to mix your coins with other users’ coins. Sure, you do not have to mix money with someone you do not trust. Everything happens through software, so you will get back the same amount of money. It is a simple way to add to your privacy.
Going into smaller details, a Bitcoin address is pseudonymous. It will not link to you as a person. But then, someone who investigates deeply enough can piece together the trail of your transactions. Eventually, they will lead to a specific address. Now, the more funds you move, the more personal information you reveal – how much money you have or how you spend it.
This is when the Bitcoin mixer steps in. You are less likely to be targeted if you have an insignificant amount of money – such as if you have just purchased your first bits of Bitcoin. But then, more money means more potential trouble. The mixer will throw off anyone who could try to track your transactions. The mixer allows mixing coins with other users and blurring all the ties to your identity.
How does a Bitcoin mixer work?
There are a few different examples to help you understand how the Bitcoin mixer works. Take a smoothie, for instance. If you are into healthy foods or perhaps gym, you know that a smoothie drink is tasty and can bring in a bunch of vitamins and minerals. Imagine throwing six different fruits in it. Each fruit should be seen like a Bitcoin address.Mix everything together and you will find yourself unable telling which fruit is responsible for which part of the taste or flavor.
Not clear enough? Try putting a jigsaw puzzle together. Pieces are nicely arranged in a container. It is quite simple, right? Imagine doing it when the container has hundreds of pieces from other random puzzles too. Besides, someone keeps emptying and refilling the container with other random pieces. The puzzle is almost impossible to do then.
The same rules apply when you mix your digital coins with other users. Transactions made with digital coins will be broken down into small pieces. Everything will be scrambled together with other transactions – not yours, but from other users. At this point, tracking each individual transaction is literally impossible. This is how Bitcoin can truly become invisible.
Why mix your coins
When Bitcoin was first used, everyone says it as a completely anonymous way to get things done. You could shop and make transactions without anyone to know anything – different from what people were used to with classic banks. The environment has been through a series of updates in the long run – more notoriety, meaning more interest as well.Digital coins are widely adopted all over the world. Governments are trying to cope up with the trend. Basically, Bitcoin’s popularity has turned it into a victim of its successful venture. Governments are now taking a closer look. They are trying to regulate such markets – some countries have even banned digital coins.
Tighter regulations are part of the game these days. Anonymity has slowly faded away. For instance, many platforms will need to verify your identity before allowing you to buy digital coins or make particular transactions. Unfortunately, many of them will also disclose your information to third parties – sometimes, to governments.
This may not be an issue if you barely have any coins. You may not be too bothered if you are honest about it. But at the end of the day, how much money you make or have is your private affair. How you choose to spend your money is your business. This is also why you never go out on the street shouting how much money you got.
Take a look at what happened to the Silk Road marketplace. Indeed, the marketplace gathered around many criminals as well, but it looks like authorities around the world can easily get into unregulated transactions, track them and discover real life identities. Keeping your money anonymous means you can regain your privacy and peace of mind – simple as that.
You do not have to be a criminal to mix your digital coins. Peace of mind is a good enough reason to do it – privacy means security.
The legal profile of Bitcoin mixers
Using Bitcoin mixers is not illegal. What could be illegal is the activity associated with your money. Basically, you need to be careful how you use your funds. If you work for those coins, perform legal activities and use your money for legal stuff, there is nothing to be concerned about. If you are trying to launder money or fund a terrorist group, you might be in trouble.Obfuscating Bitcoin transaction is clearly a way to keep money private. This type of activity can give you the privacy you want for peace of mind, but it is also attractive for those who engage into various criminal activities. The activity is attractive for those who try to dodge taxes or hiding the income associated with illegal activities.
So, is it legal to use a Bitcoin mixer? In theory, it is. As you dig deeper, you will realize that it normally depends on where you live. For example, some countries have banned cryptocurrencies at all – meaning mixers are also illegal. Now, there are officials who also claim mixers used to hide transactions represent a crime – such as Brian Benczkovski in 2021.
A couple of months later, Roman Sterlingov – the founder of Bitcoin Fog – was arrested because his software allowed people to launder hundreds of millions of dollars. During the same year, Larry Harmon – the owner of Helix, another popular Bitcoin mixer – was arrested due to his software being used to launder about $300 million.
In both of these cases, the two individuals provided a money laundering tool for criminals. Obviously, those who used the mixers with legal purposes had no problems at all. These two people were arrested because they basically provided a tool for money laundering, even if their purposes were actually clean and not intended to be used that way.
Exploring the types of Bitcoin mixers
There are lots of Bitcoin mixers and some of them may work in different ways. For example, you have both centralized and decentralized solutions to help in the process. Two particular solutions stand out.Centralized mixers
Centralized mixers work in a simple way. They accept Bitcoin and they will send back different coins. The more often you use this service, the more mixed your transactions will be. They work, but they are not perfect. For example, you deposit coins in such a mixer and there is no guarantee that you will get your money back – after all, this market is not regulated at all.Furthermore, the people behind the mixer know who sent money. They can establish identities this way. For instance, if prompted by a law enforcement agency, they can reveal such data, meaning users will lose their privacy. These mixers will also require access to the Bitcoin address, your IP and other information. If you choose such a mixer, make sure they delete private information.
Chaumian mixers
Chaumian mixers work in a completely different manner. They basically provide a pool for more users. You and dozens of other people can make a huge payment together that will be split equally to everyone in the group. If 100 people decide to send 0.001 BTC to the respective address, money will be merged and sent back. No one will tell where it originated from.Some of these mixers are extremely serious when it comes to your privacy. For example, some of them can be designed to ensure that no one knows where each transaction went – not even the people who made them. Furthermore, compared to centralized mixers, these alternatives will always return the money. Users will not sign the merged transaction without getting the money back – simple as that.
Use cases for coin mixers
Knowing when to use a Bitcoin mixer can be handy, but also confusing – especially if you are new to digital coins. Here are a few common use cases.
- Bitcoin is now accepted by businesses from all over the world. If you have one wallet for all of your transactions, you leave a trail. Illicit players on the market or hackers might actually dig that address up. Using a mixer means your transactions are obscured, so there are no traceable trails.
- Imagine having a wallet and storing more types of cryptos. Somehow, the ID of your wallet is exposed over the Internet – a leak, a hacker, you name it. Fraud is just round the corner, but a mixer will prevent it from happening.
- The necessity of a mixer is even more obvious when dealing with large amounts of money. Transactions are public. Moving large amounts of money for purchases or trading will draw hackers’ attention. A mixer prevents others from knowing which transaction belongs to who.
- Hot wallets are online, meaning funds can be exposed to all sorts of issues and vulnerabilities – malware, hackers, phishing and others. Using a Bitcoin mixers will keep all of your transactions anonymous.
Now that you understand the benefits and uses of Bitcoin mixers, what are some of the most reputable options out there and why?
Bitcoin Laundry
Bitcoin Laundry only supports Bitcoin – no other digital coins. It brings in a decent amount of features and aims to boost privacy by keeping no logs at all. It does have minimum deposit requirements – not too big, but large enough. However, there are no transaction fees, which is a plus. Furthermore, you will not even have to register to use it – even more privacy.Bitcoin Laundry supports more addresses – maximum five. On a negative side, there are no referral programs, so you cannot make money by bringing others in – a common feature in other mixers.
Mixtum
Just like Bitcoin Laundry, Mixtum only supports Bitcoin. It has a minimum requirement for the deposit as well – 0.001 BTC. When it comes to multiple addresses, it supports two only – more than enough. In terms of registration, it is not mandatory. You can register or you can do everything anonymously by not providing any personal details about yourself.Keep in mind that Mixtum comes with service charges – ranging around 5% – for transactions. If you are after even more privacy, the service also takes Bitcoin without keeping any logs at all.
CryptoMixer
CryptoMixer sticks to Bitcoin – no other digital coins. The minimum deposit is quite standard – 0.001 BTC. There are, however, some transaction fees. They vary based on the amount you transfer. You could pay 0.25% of the amount, but fees may also go up to 0.45%. You can benefit from multiple addresses – not more than 10 though. Confirmation is required when using custom options.Unlike other cryptocurrency mixers, CryptoMixer does not have a referral program. It has a small calculator that shows you precisely what you are about to get out of each transaction though.
BitCloak
BitCloak is among the popular choices out there and comes with a solid software that is less likely to fail. The deposit is a bit higher though, so it is not suitable for those who have just started buying Bitcoin – 0.01 BTC. This could put some people off. However, on a more positive note, BitCloak charges smaller transaction fees when compared to other mixers. Network fees are also relatively small.The mixer provides support for multiple addresses. You also have customer options – you do need to provide confirmation though, but only for one address. The mixer also offers some sort of a guarantee.
BitMix
BitMix stands out in the crowd because it takes more currencies. Apart from supporting Bitcoin, it can also support transactions for Litecoin. More options will give you a bit of extra variety – plus, it is great for those who use Litecoin because they no longer need to convert their digital coins. Whether you choose Bitcoin or Litecoin, there are minimum deposit requirements for both digital coins.BitMix supports five multiple addresses – no matter how many of them you need, you will have to provide confirmation. You can use the mixer without having to register – plus, there is a guarantee in place, as well as a referral program.
ChipMixer
We featured ChipMixer in the past because of its high degree of anonymity, not to mention using more addresses and wallets. There were no limits and no registration required whatsoever. It had no service fees either.However, it was shut by the police after proven to help in laundering over $844 million in Bitcoin. It was associated with the Lazarus Group from North Korea as well. Since it came out in 2017, it mixed more than $2.7 billion in Bitcoin.
It is not available anymore.
While these mixers are more famous than others, there are other reliable options to consider too:
- BitcoinMix
- PrivCoin
- SmartMix
- Wasabi Wallet
- Samourai Wallet
Conclusion
As a short final conclusion, understanding the concept, operating principles and purposes of a Bitcoin mixer is not that difficult. Such a piece of software aims to provide full control over the funds. To keep it simple, it ensures your transactions cannot lead to you as a physical person. There are no trails left behind, so no one can track anyone.Potential hacking attacks, malicious scripts, malware or third parties will be successfully eliminated. On the same note, a Bitcoin tumbler will also provide even more anonymity to your transactions – in fact, this is the most common reason wherefore people use such software.
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