Bitcoin mixer, also known as Bitcoin tumbler, is one of the most effective privacy tools available to upkeep your anonymity and privacy needed for your Bitcoin transactions.
Bitcoin (BTC) has evolved over the past decade into an appealing asset class which could potentially have use-cases and applications for the next generation of industries. However, due to the design of Bitcoin's distributed ledger, the public blockchain network allows anyone on the Bitcoin network to view the entire transaction records via platforms like blockchain explorers. By looking at the transaction patterns of a particular Bitcoin wallet, there is a fair chance that skilled individuals or blockchain analysis firms can trace the ownership of that wallet. Thus, it can be said that while Bitcoin is revolutionising the concept of a currency, where transactions can be securely made to be transparent and immutable, it is lacking in the privacy and anonymity which may compromise the safety and transaction activity of a user.
While it can be argued that anonymity is only needed in Bitcoin transactions for illicit activities, since it has been exposed in 2013 that darknet marketplace such as Silkroad chose BTC as their preferred mode of payment. On the contrary, average Bitcoin users and law-abiding cryptocurrency holders should actually be the ones who need to keep complete anonymity when dealing ordinary legal payments via BTC. Similar to a bank’s account, a Bitcoin address contains sensitive and often personal information which should not be disclosed to anyone except their own. Anonymous use of Bitcoin is needed to protect the digital assets from criminals and other unwanted individuals/entities.In fact, every Bitcoin holder is at risk of being robbed by hackers due to the traceability of the cryptocurrency.
Understanding the risks involved
The transparency and immutable features of Bitcoin protects the cryptocurrency from fraudulent transfers and coin forgery on the Bitcoin network. As the value of BTC appreciates after every Bitcoin halving, the scarcity of its supply has attracted not just first-time cryptocurrency buyers, but also more criminal acts involving theft and ransom of Bitcoin. Through the use of software solutions for blockchain analysis and tracking of transactions, hackers would be able to withdraw Bitcoin assets from the victim’s address to their Bitcoin address. In recent years, there have been several high-profile cases involving theft of Bitcoins by hackers.
A recent case involved a South Korean cryptocurrency exchange called Bithumb, in which 20 million dollars worth of Bitcoin and other cryptocurrencies were stolen. It has been found in the same month, in March 2019, where most of these stolen funds belonged to its users. Not long after, the world’s largest cryptocurrency exchange Binance had claimed that over 41 million dollars worth of Bitcoins and other cryptocurrencies were stolen by hackers. Coupled with the use of blockchain analysis tools, phishing and virus attacks, the hackers managed to withdraw a whopping 7,000 BTC in one single transaction into their wallets.
How hackers identify their victims
Experienced hackers executed highly orchestrated attacks on their victims despite the latter not disclosing any of their personal information. Therefore, it is now a well-established fact that Bitcoin transactions have practically no anonymity for its users on the blockchain. Transferring coins from one address to another cannot prevent tracking, since every transaction details including the recipient Bitcoin address will fall into the field of view of attackers. Essentially, the history of all Bitcoin transaction records can potentially reveal your identity. Blockchain analysis will provide anyone, especially individuals with a malevolent nature, to utilise this information for blackmail, theft or anything that could pose a risk to the victim.
This is where Bitcoin mixers (also known as Bitcoin tumblers) can avert a crisis pertaining to their assets and personal safety. Third party companies have come up with Bitcoin mixing services to help Bitcoin users achieve full anonymity, thereby gaining the much-needed privacy when dealing with the cryptocurrency. Bitcoin mixers are the best way to work with Bitcoin if the user is really concerned about his or her identity. Basically, these mixing services provide them with the ability to exchange Bitcoins for different ones. The ones they get at the end of the mixing process cannot be associated with them.
Removing traces of your transactions
The process of Bitcoin mixing is actually derived from a similar concept used by the traditional financial industry. It is not uncommon for holders of FIAT monies to seek an alternative way for a trustless transaction. Individuals have mixed their monies to conceal their identity and traces from regulators or unwanted entities. The funds of an individual were mixed with others' money in order to obfuscate the trail back to the original owner of the money. In countries like ‘tax haven’ nations, strict bank-secrecy laws were enforced in order to protect the banking customers. In these countries such practices were used to hide the personal information of their banking customers. As Bitcoin is increasingly viewed as a valuable form of digital currency, such a concept is now brought over to the cryptocurrency space to address similar concerns of its users. The only difference in the process is that anyone with Bitcoins could perform such mixing service themselves, directly with these third-party Bitcoin mixers.
A general guide to Bitcoin mixers
Using a Bitcoin mixer can be a convenient and quick way to attain full anonymity of users who are dealing with Bitcoin. But it is highly recommended to gain a proper understanding prior to using one. Depending on the situation or individual’s preference, there are a variety of means to use Bitcoin mixers while ensuring the entire process is seamless, secure and private. For instance, MyCryptoMixer (MCM) offers one of the best mixing services in the market, as it not only offers an affordable fee as compared to other mixers in the market, they are known to assure their customers were attended to from start to finish with options which allows the user to customise the level of privacy needed for every mix.
MCM is also known by frequent Bitcoin mixing users in the community for its ease of setup through its user-friendly interface. In the following example, we will be using MCM as an example to give our readers a walkthrough on mixing through an easy-to-use Bitcoin mixer. Before the user begins the mixing process, it is advisable to check the URL (website address) of the mixer. The widespread use of Bitcoin mixers by many privacy-focused Bitcoin users have attracted a growing number of hackers and bad actors coming up with ways such as a ‘fake website’ of the Bitcoin mixer. Thus, it is the user’s due diligence to ensure that the website address (e.g. https://mycryptomixer.com and http://mymixerxtukle6mo.onion) is correct. In this case MCM is accessible on both Clear Web and the TOR network.
Mix-and-Match Privacy Features
Within the typical Bitcoin mixer’s platform, the user will be shown a number of tweaking options to adjust their preferred privacy levels. Apart from the mandatory configuration of destination (or receiver) Bitcoin wallet addresses, the user may choose their preferred transfer time delay and funds distribution for each address. A general rule of thumb for achieving better anonymity is to split the BTC sum across multiple Bitcoin addresses, as this will hamper the tracking ability of blockchain analysis and anyone who tries to decipher the origin address. Just like a decentralised cryptocurrency exchange, Bitcoin mixers are offered by third-party providers which charge a negligible amount of 0.50% to 5.00% as service fee for the mixing service. Using a Bitcoin mixer ensures that every transaction is unique, eradicating any possibilities of tracking these transactions through a widely distributed and randomised transaction pattern, since the received Bitcoins are retrieved from other users who are also using the mixer, and the mixing provider’s own pool of Bitcoins.
An essential tool for Bitcoin’s privacy
At the time of this writing, Bitcoin is still considered as a pseudonymous cryptocurrency which could not protect the identity of the user. Through an intricate process of blockchain analysis, anyone with the right skills and resources could decode the ownership of any Bitcoin addresses found through the Bitcoin’s blockchain network. Using a Bitcoin mixer at this moment will give the user an additional layer of privacy and anonymity to their Bitcoin transactions, saving them from potential risks such as theft, leak of personal information, and even ransom. For a more in-depth Bitcoin mixing tutorial, MCM has written a well-documented Getting started article for anyone that is keen to maximise their anonymity through a Bitcoin mixer.