Bitcoin mixers hides your identity for every transaction you make. But how exactly does it work and what makes it secure? Let’s dive into the wonders of Bitcoin mixing and the process that keeps your transaction private!

Have you ever thought if the Bitcoin transactions you have made were completely anonymous, and other people would not be able to trace them back to you? Well, it’s not.

Bitcoin transactions are processed through a global online ledger called the blockchain. Since the blockchain is an open-source journal, it can be reviewed by people who know how to. This means that someone if they will, can see that you sent 1 BTC to a person two days ago.

Bitcoin transactions are psuedonymized, but…

Well, it is important to understand that Bitcoin transactions are not necessarily linked to a specific name. The blockchain review can only uncover information like only the amounts, addresses, and transactions. However, there are still other ways that someone can track your bitcoin transaction back to you. It’s the internet, nonetheless.

According to Bitcoin creator Satoshi Nakamoto:

“The possibility to be anonymous or pseudonymous relies on you not revealing any identifying information about yourself in connection with the bitcoin addresses you use. If you post your bitcoin address on the web, then you're associating that address and any transactions with it with the name you posted under. If you posted under a handle that you haven't associated with your real identity, then you're still pseudonymous.”

There are different ways how can third parties associate your Bitcoin address to your real life identities. Here are a few of them:

  1. Connecting points: Hackers will be able to trace your identity by connecting multiple nodes, allowing them to reach the depth of each transaction. Without breaking the trail, hackers will be able to explore the source of those transactions and can establish a real-world identities for both the originator and the destination of the transaction.
  2. Using personal information in intermediary services: One way of tracing the identity of the person making a bitcoin transaction is by tracing the personal information provided by the users in third-party services like Bitcoin exchange platforms.
  3. Keeping transaction records: Transaction made using Bitcoin is recorded through a global ledger called the Blockchain. Everyone who has access and know where and how to look for information in the network can link one transaction to a real-life identities.
  4. Web Cookies and Traffic Trackers: Browsers have the capacity to track everything you do online. This also gives third-parties more opportunity to link your BTC transaction to your name and identity.

How to make your bitcoin transaction completely private?

But the biggest question is: how do you make your bitcoin transaction privately and anonymously? The obvious answer to this is Bitcoin mixing. Sometimes called Bitcoin tumbling or Bitcoin laundering, it is the process of concealing and obscuring the trail of bitcoin transactions so that it won’t be traced back to a certain user.

How does Bitcoin Mixing work?

What is Bitcoin Mixing? In a nutshell, crypto mixing is basically pooling the coins of many users and randomly sending them back the coins from the pool. But in a more technical sense, Bitcoin mixing involves the usage of a third-party service to break the connection between the wallet address sending coins and those who receive them. By mixing your Bitcoins, it is harder for other people to track who you bitcoin came from or who you sent them to.

To further demonstrate the process clearly, imagine that you have 1 BTC sent to you by your friend. In order for other people not to trace where you got your bitcoin, you used a bitcoin mixing platform and sent them your 1BTC. After doing this, the bitcoin mixing platform will use the bitcoin sent to them by other users to send back to you. This randomization is critical because the new bitcoin that you have right now will no longer be traced back to the friend who sent you 1 BTC.

What makes bitcoin mixing secure?

But of course, not all bitcoin mixers are designed the same. Some of them have more privacy mechanisms embedded in the system in order to add new layers of security to the bitcoin transaction that you made. One of the best Bitcoin mixer available in the market right now is

With the best bitcoin mixer like, the processes of concealing the trail of bitcoin transactions become virtually impossible to crack – even by future quantum-based computers. The time-freezing capability of mixers creates a natural pattern for the bitcoin transaction instead of rapid movements, which effectively covers tracks.

What makes Bitcoin mixers more secure is the fact that it is done by literally “mixing” your coins with others. This process makes it difficult for a spectator to find out where the transaction originated because in order to do this, they have to review the entire mixing process - piece by piece.

Who uses Bitcoin mixers?

The main user of a Bitcoin mixer is mainly the person sending money because the payment is processed by the mixer so that the spectators won’t be able to determine where the funds came from after it reaches its desired destination. Sometimes, BTC mixers can also be used to purchase Bitcoins anonymously.

While it is true that many criminals are using bitcoin mixers to launder money out of their pockets, they are not the only ones who are using it. It can be used by anyone who wants to protect their identity from third party intrusion. For more information regarding this, we have a separate blog post discussing why you need to mix your coins, which can be accessed here.

Final Thoughts

Bitcoin is definitely an awesome cryptocurrency. However, with the increasing demand of people for privacy protection, the coin needs to up its game in terms of protecting the anonymity of its users. For the meantime, there are workarounds to assure that while using Bitcoin, your identity is kept a secret. The rise of Bitcoin mixers is one step towards making Bitcoin a safe and secured cryptocurrency.