Bitcoin mixer – description, principle of operation, popular services

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What is a bitcoin mixer

Anonymity and decentralization are the key difference between cryptocurrencies and fiat money. But it’s worthwhile to clarify that all data on completed transactions is nevertheless stored and reflected in the blockchain registry, which allows you to track the path of each unit to its final storage location. In this regard, recently actively developed services and programs aimed at tracking operations within the system.

The indirect anonymity of Bitcoin has misled many users. Often, some participants in the system use the blockchain to accept not quite legal payments or tax evasion. Even if all the transactions received are completely legal, it is worth considering the anonymity of the transactions, since with a basic knowledge of blockchain technology, any user can track the transfer data, find out the current balance and see where the funds are stored and how the funds are withdrawn, which makes users vulnerable to scammers and Regulatory authorities. In order to confuse the traces of transactions, a lot of techniques are used, and special services have also been developed – bitcoin mixers.

Bitcoin mixer is an anonymization service that complicates or makes it impossible to track transactions in the blockchain by dividing transactions into small amounts and repeatedly moving between different addresses.

Thus, users can enter into the mixer the coins assigned to one transaction, and withdraw completely different ones, while there will be a huge number of transactions between tokens, which will break the connection of identification with each of the participants.

Types of Mixers

All transaction anonymization services are divided according to the principle of work into two types.

  • Centralized bitcoin mixers are the first generation of services, where the level of anonymity depends on the total number of users, and the security of use entirely depends on the professionalism and honesty of the service developers.
  • Peer-to-peer bitcoin mixers are an advanced model of centralized services, using which anonymization is carried out without the intermediary cooperation of developers.

The principle of operation of the bitcoin mixer

When using centralized Bitcoin mixers, anonymization of funds is achieved by mixing all transactions received from users. So the user sends his funds to the service, pays the set commission and receives exactly the same amount of funds, but only in other coins.

When mixing, all funds are crushed into small parts, and then randomly sent to the purses created by the service. Such an operation can be repeated dozens of times, and only after that the coins are sent to the participant’s address specified for receipt. The service should be reliable and technically secure, since such a method of mixing is associated with the risk of theft of funds sent by the developers of the platform, and insufficient technical security can become the basis for hacker attacks and hacks. In addition, no one gives a guarantee that the service does not keep records of transactions.

Peer-to-peer mixers have been developed as an alternative to the imperfect model of centralized bitcoin mixers. The Bitcoin tumblr in this case serves as a platform where users who wish to anonymize funds can interact without an intermediary. To do this, several users are combined into a peer-to-peer group and form a transaction that goes through several stages before being sent from one user to another as intended. None of the participants in the transaction knows any data about other users and stages of mixing, and the lack of participation of the service in mixing eliminates the possibility of theft of funds of participants. Anonymous transactions are paid randomly for a random number of coins, which add up to the amount necessary for payment.

What is the need to use a mixer

Everyone has heard about the anonymity of Bitcoin, but few people know that this is practically a myth. Since the developers invested a completely different meaning in this concept than modern token holders who believe that all their transactions in the network are not identifiable. Bitcoin anonymity consists in the absence of the need to enter personal data and the lack of system control over transactions and their purpose. But the blockchain itself is a database that stores the history of all completed transactions. Of course, in the blockchain registry there is no personal data of transaction participants, and the bitcoin wallet address is not personalized.

At first glance, it looks quite safe and anonymous, because the blockchain does not provide any personal data about the holders of coins. However, it is worth connecting your data once with a transaction, for example, paying for the delivery of goods to your home or withdrawing funds to a card, as all transactions in the system can become personalized when monitored by regulatory authorities. This already provides an opportunity to track the method of earning, depositing and withdrawing funds, as well as all payment purposes and the available savings of each bitcoin holder, with proof of belonging to a specific person.

The wave of arrests of criminal elements that accepted payment in bitcoins is proof of this. It is worth noting that in the field of view of law enforcement agencies, transactions for rather large amounts predominantly fall. Even if the user does not commit illegal actions, no one gives a guarantee that the transactions made will not seem strange to the special services.

How to use a bitcoin mixer

When connecting to a Bitcoin mixer, it is recommended to use a connection through proxy servers. Some services have a built-in connection through Tor. Next, go to the official website of the selected service and go through the easy registration of new users.

Each service offers individual methods of interaction, but in most cases it is necessary to deposit funds into an account in your account, mix and withdraw anonymous coins in the preferred way. The Bitcoin wallet address generated within the system is often available only within 24 hours. For some services, minimum transactions and additional conditions of cooperation are established.

An important point in the use of bitcoin mixers is a guarantee letter indicating the wallet address and a special code, which is issued by the service when participating in the mixing. The letter should be downloaded or its text copied. When withdrawing funds, the service requires you to indicate it as evidence. If the letter is lost, the funds will also be irretrievably lost.

The speed of the services depends on the amount of transfer and the number of necessary confirmations. To complicate tracking, pending transactions may also be offered to users.

In order to increase privacy, in addition to intra-service mixing, you can use other methods:

  • Withdraw funds from the service after a long period of time.
  • Divide the deposit into several parts.
  • Divide the withdrawal into several separate parts with the withdrawal to different wallets.

Conclusions

Bitcoin anonymity ends if the user once associated his wallet address with personal data during the transaction. Therefore, in order to ensure sufficient confidentiality and confuse the traces of transactions, additional services should be used. The choice should be made in favor of proven platforms, as there is a possibility of fraudulent actions in favor of developers.

Another risk fraught with bitcoin mixers is insufficient mixing of coins. It is likely that with insufficient mixing of the transaction, you can still partially or fully track it. In this case, users additionally run the risk of having on their account not their legally earned tokens, but coins received for illegal actions. For example, those involved in the payment of drug trafficking. You can additionally secure yourself by depositing and withdrawing funds through services with different time intervals and random amounts.

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