Bitcoin mixing helps you keep your identity safe and secured. But have you thought about how it works and why is it important?
One of the biggest promises of cryptocurrencies, especially Bitcoin, is to protect the privacy and accuracy of the transactions that are passing through the entire blockchain. It works for most parts, but there is definitely are methods in order to uncover the real-world identities linked to the supposed “pseudonymized” Bitcoin identities a user has.
It is important to note that when making Bitcoin transactions, the only trail that can be traced back to is your Bitcoin address – but even if this address is anonymous to a certain degree, there are other ways to link them back to you. For example, if you happen to withdraw funds through a Bitcoin exchange platform who knows your identity, the transaction can eventually be traced back to you.
In short, the people who know how and where to look for it can definitely trace one transaction to the real-world identities of the parties making the said Bitcoin transaction. Thankfully, for whatever purpose it may serve, there is a way for people to add extra protection to their identities when making Bitcoin transactions – Bitcoin Mixing.
What is Bitcoin Mixing?
Bitcoin Mixing is the process of letting users “mix” their coins with other users in a pool of funds. This way, the coins will be once again anonymized, and the trail will end and restart at the Mixer. By mixing their Bitcoin, users will be able to obscure the link between their Bitcoin addresses and their real-life identities, making it easier for users to make transactions privately.
How does Bitcoin Mixing work?
Bitcoin mixing works in a pretty straightforward way. It involves the use of a third-party software where you can send your coins and who will swap the coins previously sent by other users back to you in the same amount. This way, the trail of Bitcoin transactions made by the coins you wanted to mix will be broken and will be replaced by a new coin that will have a totally different trail in it. If you don’t want the whole world to know who you sent your coins to or who sent you some coins, bitcoin mixing is your best hope.
The third-party software used for Bitcoin mixing is what is called a Bitcoin Mixer or a Bitcoin Tumbler. By the name itself, a Bitcoin mixer serves as an intermediary between you and the recipient or the sender of the coins in a transaction. In the simplest term, Bitcoin Mixers are randomizers of coins so that what you receive or what you send becomes random and will not be traced back to your Bitcoin Wallet.
One of the best Bitcoin Mixers in the market right now is MyCryptoMixer. It works like a standard bitcoin mixers with unique algorithms that add a layer of privacy to your transaction. The platform allows you to randomize and anonymize your coins by Time Freezing the transactions so that it mimics the actual behavior of cryptocurrencies - making it virtually impossible for other interested parties to trace the trail of the transactions back to your identities.
Step-by-step guide on how to mix your coins
- Create BTC wallet #1.
- Buy some coins and transfer them to wallet #1.
- Create BTC wallet #2 over the Tor network.
- Send your coins from wallet #1 directly to wallet #2.
- Create BTC wallet #3 over the Tor network.
- Select a mixer service (MyCryptoMixer) and set up your transaction there using the address(es) from wallet #3. It is recommended that you use multiple addresses and to set random time delays (always make sure you are using the correct (dot)ONION links!).
- Send the coins from wallet #2 over the Tor browser to the address generated for you by the mixer.
- You can use Blockchain.info’s Tor hidden service to watch for your coins arrive from the mixer. Once you have them, restart Tor and then send the coins to their eventual destination.
Why should you mix your coin?
We have heard it multiple times that only criminals are concerned about the anonymity of their bitcoin transactions. That is entirely untrue. Everyone who makes Bitcoin transactions need to protect their privacy because that is a basic human right. Here are a few of the most compelling reasons why mixing your coins is very important.
To prevent third-parties from looking into your economic behavior
We all know that many third-parties, including intrusive businesses and advertising firms who are keen on analysing the buying behavior of people for advertising purposes. By not mixing your coins, third-parties will be able to see how much you spent, where you spend them, and how much bitcoin you own. If you don’t want your mom to snoop around your room, why would you let these totally unrelated strangers see how you spend your money?
Avoiding real life threats
Not being anonymous with your bitcoin transaction can also lead to real-life threats. Since anyone can have access to your transaction history via the blockchain network, criminals too will be able to see your behavior. This is far more alarming that what is mentioned above.
Example #1: Imagine having more than 50BTC in your wallet. In real-life currency, that roughly translate to $450,000. Since criminals will be able to see that this is the amount of money you have in your wallet, they might decide to go after you. Following the details they find in the blockchain network about you, they can deduce it determine your real-life identity. Once they figure this out, they might launch a plan to kidnap you or blackmail you for money. This is all because they know that you have a lot of money in your account.
Example #2: Now, the criminal decided to take another route and instead of abducting you, they sent you a phishing email that is so believable that you fell for it. Hackers can send your devices a certain malware that could steal all the contents of your Bitcoin wallet. While in this example, you will not be harmed, you will still lose your funds.
It might appear like these situations are purely hypothetical. However, they’re not. Both of these examples have happened in real life and people have actually fell victim to criminals and hackers just because their transaction history is widely available in the blockchain network.
We have established that cryptocurrencies are not completely anonymous. While a certain degree of anonymity is offered by not providing personal information when making a transaction, there will always be people who will be able to link your transactions back to you. That is the reason why you always need to mix your coin. It severs the links between your Bitcoin transactions and your identity. Through Bitcoin mixing, you can use Bitcoin to make a transaction without the fear of someone snooping around where they should not.