There is an opinion about the anonymity of the blockchain and projects based on it. You can use bitcoins and no one will know about it. Yes, blockchain is a decentralized distributed network, however, transaction data is recorded and stored on the blockchain. It is not difficult to trace a transaction or obtain information about the origin of an asset. To anonymize transactions, special programs are used – bitcoin mixers.
With the help of a mixing service, you can complicate the control over the implementation of cryptocurrency transactions. The need for anonymization is associated with commonplace security. Fraudsters can track the transfer and hack the cryptocurrency wallet.
Bitcoin mixer literally mixes money with each other, hiding transfer directions, their volume. Each cryptocurrency transaction that goes to the mixing service is divided into many small parts that are mixed with parts from other transactions. In this case, the user receives the amount he needs. Bitcoin mixer is presented as a separate program or online service. They differ in the level of mixing, additional features.
The Need for Bitcoin Mixers
Bitcoin is ideal for cheap transfers. With its help, it is convenient to pay for goods or services, to make investments. The fiscal authorities may not even be aware of such operations. By analyzing transaction data, you can track any transactions, establish the origin of coins. Therefore, bitcoin mixers are primarily used by scammers for tax evasion. With this direction of application, cyber units of law enforcement agencies are fighting.
There are other reasons for mixing:
- ensuring maximum safety;
- concealment of the fact of the presence of cryptocurrency.
Bitcoin mixers protect crypto assets from intruders, hide users’ personal data, and ensure the anonymity of transactions.
The legality of cryptocurrency mixers depends on the status of the cryptocurrency itself. In some countries, bitcoins are legal tender, in others, they are prohibited. Accordingly, the approach to the legal definition of bitcoin mixers is different. Mixing itself does not violate any law.
Types of Services
Bitcoin mixers differ in how they work:
Centralized services are distinguished by a simple principle of operation, the owner of the cryptocurrency transfers his coins, receives back the assets of other users. The more participants, the higher the level of anonymization.
Some services have their own cryptocurrency on their balance, which is also involved in the mixing process.
Additional ways to enhance anonymity:
- the transfer is performed after a time (from several hours to a day) – in this case, it is difficult to link a transaction to a specific record time in the block;
- the commission for services is within a certain range of values and is determined for each operation at random;
- the transaction is divided into several parts and sent to the user from different addresses.
Peer-to-peer bitcoin mixers – users are combined into pools using special platforms. All participants are unknown to each other, no personal information, complete anonymity. Cryptocurrency transactions go through several mixing stages before reaching the user. At the same time, the order of distribution of coins, their volume in one operation also changes.
Examples of bitcoin mixers:
- BitBlender and others.
When choosing a service for anonymization, you should focus on reviews on specialized sites, the presence of your own reserves, history, the size of the commission, the absence of transaction logs (the ability to delete them). It is also worth paying attention to the presence of the Onion address in Tor, which is used for surfing the Darknet.
How to Use Bitcoin Mexers
- choose a bitcoin mixer;
- transfer bitcoins;
- keep the letter of guarantee – it serves as a confirmation of the right to the coins sent for mixing;
- choose the delay time, the degree of anonymization, other parameters (depending on the capabilities of the service);
- receive cleared bitcoins.
The use of bitcoin mixers does not provide complete anonymization of cryptocurrency transactions. With the help of special analysis methods, it is possible to determine the history of coins, including after a complete mixing.
There are companies that develop programs for analysis (by clustering and so on) – Bitfury, Chainalysis. They are in demand among blockchain researchers, special forces of law enforcement agencies. They are also used by cybercriminals to track cryptocurrency transactions for fraudulent purposes.
As a result of mixing, there is a possibility of receiving “dirty” coins, which are followed by a train of illegal operations (trade in weapons, drugs, organs, people, pornography, and so on). Then serious problems with the law may arise.
There is a chance to get caught by scammers. Such a bitcoin mixer works in one direction – after transferring money to the generated address, you can forget about the coins.