What is a Bitcoin Mixer and Why Do People Use It
Do you still believe that bitcoin transactions anonymous? It has been confirmed many times that crypto transactions can be traced and it is possible to find out the name of the wallet owner if he or she has ever associated it with the wallet used. Therefore, more and more bitcoin holders decide to try mixing coins on the platforms to make them untraceable.
There are people who haven’t heard about this process. What is bitcoin mixer they may wonder?
Look: this article will provide an answer to this question and reasons for crypto holders to use it.
Table of Contents
What is a Bitcoin Mixer
Bitcoin mixer is an online service or a platform that helps to anonymize cryptocurrency. These platforms are also known as a scrambler or tumbler services too since their goal is to break the user’s coins into multiple small parts and mix them with other parts provided by other crypto holders or coins owned by the service.
You may wonder what is the sense to mix coins if bitcoin transactions are anonymous. In fact, many experts use the word combination ‘pseudo anonymous’ since the history of all transactions is recorded by the blockchain and can be accessed by everyone who is interested in it. It allows tracking how many transactions were made within a certain period of time and even find out the owner of the wallet if he used to purchase anything online. It is not a rarity that even paying with BitCoin buyers provided their names, surnames, addresses, and phones to receive the goods purchased. A simple comparative analysis can give an answer to the question of who is a holder of a certain Bitcoin wallet and interfere with a person’s privacy.
Though the word ‘tumbler’ may sound unfamiliar to someone, in fact, it has been used for years describing mixing people’s funds with other money to make the trail back confusing. Nowadays, it has acquired a new meaning to describe the cryptocurrency mixing process.
Despite being called with such not familiar names as scrambler or tumbler, the mixing process is very easy, fast, and can be performed even by beginners in this industry.
How Does a Bitcoin Tumbling Work
The main goal of every scrambler is to break the connection between the address of the sender’s wallet and the recipient’s wallet. As a result, even if anyone decides to trace the transaction, it will be impossible to find out where they have been delivered to. Naturally, it is possible to see that a sender performed a money transaction but there will be no connection between the sender’s and recipient’s wallets since the last one will receive funds from absolutely different addresses not connected with a sender.
A user who wants to have coins mixed can select between two popular ways:
- Bitcoin tumbler;
- Peer-to-peer mixing.
Using the services of an online tumbler is very easy and comfortable. It is enough to provide the address for clean coins to be delivered, set the delay time, and the amount to complete the process. Every platform generates an address where tinted coins must be sent to and be added to the pool of funds to get mixed there. As a result, a client of the service receives a Letter of Guarantee that his coins have been taken by the scrambler and must be delivered to the address provided in a certain period of time. A service takes a small commission from the total amount and returns clean untraceable cryptocurrency to another wallet provided by the user.
Peer-to-peer platforms do not have their own pool of coins. These are websites that unite Bitcoin holders who want to arrange mixing without a necessity to pay a commission to the company. Bitcoin holders visit such platforms since there they can create an exchange transaction between all the participants of the process. As a result, coins of every participant are added to the new pool created and mixed there with each other, so only a service where this process was organized knows about the connection of incoming and outcoming coins. If this operation is performed multiple times, it will provide the same privacy level as tumbler companies.
Is Bitcoin Mixing Illegal
It goes without saying that none of the state governments all over the globe have created regulations for Bitcoin mixers, so their legal or illegal character has not been officially determined. However, the legality of the Bitcoin Mixer use depends on the intention of the client. If one or another person wants to hide the trace of the coins which were stolen, it is natural that these actions must be referred to illegal ones and mixers should not perform these services. At the same time, there is nothing bad in keeping all your crypto payments confidential if you just want to prevent others from envy or discussions of your income. This medal has two sides, though there are many arguments about the status of mixer platforms. The reasons that such services help criminals to get away from punishment makes many experts express their negative attitude to such platforms and recognize their operation illegal at the legislative level of every country.
Should You Use a Bitcoin Mixer?
Bitcoin mixing can be used for a variety of small purposes but there is one great goal uniting all the clients of such platforms – making crypto transactions 100% anonymous and untraceable. This desire makes many users try tumbler platforms even despite being confident that they will get their funds back and a necessity to pay a commission. Therefore, it is very important to evaluate all the pros and cons of scrambler services before making a final decision to use them. Naturally, there are certain benefits you get from using the services of Bitcoin mixers:
- It allows avoiding huge amounts of taxes to be paid to the government of the country
There are countries that oblige their residents to pay taxes from any income they get and crypto trading and mining are also among them. However, it is possible to avoid giving a good deal of your crypto income to the government by hiding traces of the coins possessed. Naturally, it’s illegal to act in this way and it is one more reason why Bitcoin mixers can be once prohibited to use.
- Hiding crypto income from others
There are different reasons why people do not want others to learn what they spend money on. Some keen players do not want others to find out about their gambling addiction. Passionate lovers would like to keep their purchases from erotic stores in secret, while philanthropists who make donations also may desire to do that confidentially. Mixing services help people preserve their privacy of crypto transactions in a safe and easy manner.
- Refusal to accept deposits coming from known HYIPs and Gambling sites
It is a widely known fact that coins received from HYIPs and gambling sites are considered tinted and can be not accepted by exchangers. Imagine a situation when you feel on top of the world thanks to winning a huge prize in the Bitcoin casino, but when you decide to withdraw your funds and exchange them, none of the platforms accept them and it is a real disappointment. However, a tumbler can be a way out of this situation since it cleans tinted coins and makes them untraceable.
However, there are reasons why the use of a scrambler may lead to negative consequences for a crypto owner.
- Bitcoin mixing involves risk
It is not a rarity to see a variety of scammers who open platforms, attract money, and never give it back. It means that not all tumblers can be trusted and when you send your BTC to the platform, there is some risk that your crypto coins can never be returned.
- Bitcoin mixers serve illegal purposes
It is predictable that not only people who have mined or purchased coins themselves use scramblers. There have been many examples that tumblers served illegal purposes including different financial crimes such as tax evasion, money laundering, fraud and darknet crimes. Moreover, hackers use these platforms for cleaning tinted Bitcoin stolen from other wallets. It means that people who do not violate the law should omit such platforms which may be once recognized illegal officially.
- Substitute Bitcoin with Monero
It is possible to avoid mixers using Monero crypto coin which famous for its anonymity. It means that you do not need to pay commissions and risk your coins to be able to clean them.
How to Use a Bitcoin Mixer
It is difficult to determine the best way to use crypto mixer since they are very similar to each other. No matter what way of mixing you choose, the tumbling process is usually performed by the service and requires a user to make several simple steps:
- Create a wallet which will be a destination for clean coins to arrive.
- Open a mixing website and register an account (if necessary).
- Deposit money to the account or send it to the address generated by the service.
- Indicate the amount to be tumbled and the time of delay.
- Provide the address for crypto coins to be delivered to after mixing.
- Download the Letter of Guarantee.
- Wait for your funds to arrive to the wallet address provided.
These simple steps are similar on most platforms though they can be presented in a different order and with some exceptions. At the same time, it is difficult to doubt the simplicity of the mixing process because even a child can cope with it.
Popular Scramblers
The number of online tumblers is constantly increasing since more and more people start using cryptocurrency. However, not all of them can be considered reliable. These scramblers are considered to be the most popular ones on the web.
This is a high-volume BitCoin Mixer operating since 2016. Its minimum fee is 0.5% plus 0.0005 BTC for every incoming transaction. It can decrease if the amount of coins mixed grows and sends back only market coins mixed in the pool of coins from the company reserve and other users.
This tumbler offers a cheap and almost instant mixing with only 2 confirmations. There is no need to sign-up an account and the commission is very low – only 0.1%. The minimum and maximum amount per one transaction is 0.001 BTC and 30 BTC.
This blender does not require registering any accounts to be able to mix coins. It is enough to provide a recipient’s address, delay time, and amount to complete the process. The system supports sending coins to multiple addresses while fees vary between 0.5% and 2%.
Summing up
It has become clear from the article that crypto mixers have appeared after it has been proven that crypto transactions are not absolutely confidential. Having become a very popular way of hiding and cleaning tinted coins, mixers are incredibly popular among people who possess Bitcoin and do not wish anyone to know about this fact. Moreover, they serve many other purposes though not all of them are considered legal.