Using a bitcoin mixer keeps your cryptocurrency private by incorporating an extra privacy layer that mixes the trail of the transaction.
Anonymity is just a part of cryptocurrency’s fundamental concept. Holding your finances under the radar and away from the prying eyes of third-party entities is what made it a mass appeal for traders today. Combined with the underlying blockchain technology, Bitcoin was a breath of fresh air in a very stale vault.
Similar to other cryptocurrencies, Bitcoin was developed on blockchain technology, a proprietary, stable, and permanently distributed ledger. Although the blockchain is private, transactions performed by those on the network can be viewed by the community and this is because the transactions are distributed to everyone on the network. As a member of the community seeking anonymous transactions, it is critical that you make use of the Bitcoin mixer. Utilizing a mixer obfuscates Bitcoin addresses, making these transactions harder to track.
Defining Bitcoin mixing
A Bitcoin mixer is simply an algorithm that has been designed to help you randomize your Bitcoins, thus, enabling you to obscure transactions that cannot be seen by any user on the network. Thus, it adds an additional layer of privacy to your bitcoin transactions. The process of Bitcoin mixing involves using third-party services to break the link between wallet addresses sending tokens and the receiving addresses, where they mix the coins with other previously sent coins to the address that the user has specified. With more advanced technological solutions being developed to make Bitcoin transactions traceable, it is getting even more crucial to keep your identity hidden through a mixer. Even if transactions are made solely for online purchases or donation purposes, it is still important that you use this advanced algorithm to shuffle your coins.
Understanding the purpose of mixers
One of the primary purposes to mix is to conceal the identity of users. Mixing allows users to carry out anonymous transactions while protecting one from fraudulent or malicious hackers seeking to get their hands on the digital asset. As noted in our previous article on “Deciphering the minds of Hackers”, an increasing number of hack attempts have been directed at stealing cryptocurrencies, especially Bitcoins. It is therefore necessary to keep your coins safe from hackers. Currently, most people dealing with cryptocurrencies rely on exchanges and other software wallets with no cold storage features. These storage options are highly susceptible to security compromises by hackers. Also, more centralized cryptocurrency exchanges are seeking their users to complete the legally-binding KYC and AML procedures. While it ensures the regulators of the legitimacy of these exchanges, it comes at an expense of users’ privacy. Therefore, one way to keep your coins untraceable will be to mix your coins with a pool through a trusted mixer. The mixing procedure on the platform is extremely simple and quick as well.
Minimizing identity exploitation
Good mixers with high liquidity like MyCryptoMixer offer users the highest level of protection and anonymity to personal data. They are designed with several functions that minimize and even eliminate any chances of transaction analysis by bad actors or government authorities. For instance, measures such as multiple transactions, random service fee and deferred transactions remove the traceability of the mixed coins sent to assigned destination addresses. Multiple transactions are highly recommended as mixers will be able to send the mixed coins across multiple addresses, complicating the work of the pursuers and increase the complexity by many folds. Randomized service fee or commission to the mixer disallows anyone from discovering the source of the mixed coins as well as the original amount within the transaction.
Finally, users could also select the time taken for the mixed coins to reach the assigned destination addresses. This function is called deferred transaction, or delayed transaction of the mixed coins. A deferred transaction prevents hackers from determining the origin of the coins easily, thereby impeding their progress in trying to decipher information about one’s Bitcoin transaction. As a result, hackers will have to spend several hours or even days to locate the transaction via the blockchain, rendering the hack operation an “utter waste of time”.
With appropriate measures in place, good mixers will be able to offer full anonymity to users. Although the service is offered by a centralised third-party provider, finding the right mixer will also keep you with a peace of mind as they do not store any logs anywhere on their server. In the unlikely event that a provider is forced by organizations or regulatory bodies to reveal any data of its user database, users are guaranteed of the untraceability of their activities using the mixer as no logs are stored. Additionally, users are not required to create an account using the mixing services, thus reducing the chance of transaction details being traced back to the user.
Is it illegal to use mixers?
When regulatory entities often convince the cryptocurrency community that the Bitcoin mixer is an instrument for bad actors since the primary purpose of a mixer is to remove the traceability of the cryptocurrency transactions to its origin, many people have misunderstood the true intent of bitcoin mixers - to offer anonymity and privacy to users in today’s world where financial privacy is of paramount importance. It is not as sinister as what regulators have claimed it to be. Consider the fact that traditional banks have been withholding the information such as account balances and other personal information of their customers to the public, as they are well aware of the privacy concerns of their customers. Similar actions have been taken by governments, educational institutions and even eCommerce sites such as Amazon and Alibaba to protect the users information from disclosure to the public.
For decades, the laws of many countries protect the integrity of personal data and the privacy of financial information. On the contrary, popular cryptocurrencies such as Bitcoin and Ethereum are not built to be anonymous. Anyone that obtains a Bitcoin address (similar to a bank account number) will be able to track and view the account’s transaction record through a blockchain tracker which is readily available online. In that case, cryptocurrency holders should also have the right to protect their transactional information and privacy, just like how banks and governments are doing to protect the interest of the people. As such, bitcoin mixing services which offer Bitcoin users full anonymity and financial privacy should not be viewed as ‘illegal’. The folks at MyCryptoMixer have also compiled a detailed informative article - “Why Should I Mix Coins?” which explains the benefits of using mixing service and justifications to it being a legal service. It’s not just lawbreakers who should blend their coins at a Bitcoin mixer.
It is still relevant to mix your Bitcoins
Bitcoin and the rest of the cryptocurrency market is emerging as a legitimate form of investment asset, and the underlying blockchain technologies are being applied across various industries worldwide to solve issues in multiple areas. However as with most cryptocurrencies, the distributed ledger on blockchain networks are public, this translates to a privacy issue such that anyone on the Bitcoin network can access transactional records on tracker sites like Blockchain.com. Should an intervention by bad actors occur, the transparency offered by the Bitcoin network could also allow them to easily access the transaction history of users, as long as they are able to gain access to the user’s public Bitcoin wallet address.
The new asset class, Bitcoin is popular amongst investors in the market, albeit not privacy focused. This is where centralized Bitcoin mixers compliment by adding the additional layer of privacy to Bitcoin transactions. Therefore, despite allegations by some regulatory entities, mixers may not lose their foothold as a supplementary service for Bitcoin holders. Renowned analytic firms and other regulators have not rendered coin mixers completely useless. Bitcoin mixing has become incredibly popular since the time when the primary evidence of coin traceability has been presented. A pseudo-anonymous character of crypto transactions led to the very fact that crypto holders began to seem for reasonable and effective ways to increase the extent of confidentiality and Bitcoin mixing platforms became one among them.