Bitcoin is an alternative safe haven asset amid an uncertain market brought about by the economic turmoil invoked by COVID-19
The renewed tension between the United States and People’s Republic of China (PRC) triggered a massive sell-off in May 4, after the White House renewed efforts to blame China’s Wuhan Institute of Virology for the coronavirus pandemic. Market uncertainties have made investors seek refuge of their investments in safe haven assets such as gold, in order to gain protection from market downswings. This liquidity crunch and ensuing intergovernmental conflict is also cementing Bitcoin's role as a safe haven asset. Fuelled by the highly anticipated third halving event, many investors are gaining interest in the decentralised digital asset which was once frowned upon in the early years of Bitcoin.
Most prominent cryptocurrencies including Bitcoin are not fully anonymous. Also known as pseudonymous cryptocurrency, users can track the sender and recipient of any Bitcoin address with the information easily accessed by blockchain explorers. Thus, personal information and spending activity of any Bitcoin address can be traced back to the user. Essentially, most Bitcoin holders today are subject to Know-Your-Customer (KYC) verification on almost every fiat-to-crypto centralised exchanges and payment services in the market. Many cryptocurrency advocates are aware of the privacy concern with regard to Bitcoin transactions, which explains the surge of usage on the privacy-enhancing tool called Bitcoin mixer.
The role of a Bitcoin Mixer
As the name suggests, the Bitcoin mixer is a third-party online application which enables the user to mix their Bitcoins purchased from centralised exchanges and other Bitcoin buying platforms, adding an additional layer of privacy to their Bitcoin transactions. The Bitcoin mixing service is known to ensure privacy and complete anonymity of the user, making it almost impossible for blockchain analysis tools to track the mixed transaction. Although privacy-enhancing tools are scrutinised by governments and law enforcement agencies due to a small percentage of Bitcoins acquired through illicit activity, most ordinary users find it crucial to protect their personal information and transactions from criminals and unauthorised surveillance in the digitally connected world today. The team at MyCryptoMixer has compiled a comprehensive and easy-to-read guide on using their popular Bitcoin mixing service.
Enhancing your Privacy with the right online tools
A 2015 survey by Novetta, a data analytics company who has worked with various US government agencies, showed that using Bitcoin mixing services can effectively sever direct linkage between originating and receiving addresses. It is even thought that this third-party solution could make Bitcoin transactions more anonymous than privacy-focused cryptocurrencies like Monero and ZCash.
However, in countries where cryptocurrency and Bitcoin mixers are prohibited, users should be cautious about their dealing and deploy necessary steps to strengthen their privacy and anonymity. The advantage of reputable Bitcoin mixers like MyCryptomixer offer access to their service through both clear net and TOR browsers. Other precautionary measures include splitting of their Bitcoin funds into multiple Bitcoin addresses at varying time intervals. Thus, in order to attain maximum anonymity, it is advisable to access the mixing service through a VPN and TOR browser. For those who have heard about or are keen on making their Bitcoin transactions untraceable and private, there are five reasons that most users who value their privacy and identity protection have used Bitcoin mixers at any point in time that requires anonymity.
1. Protect Bitcoin against bad actors
The concept of blockchain and cryptocurrency is originally intended to offer a transparent and immutable method of permanent data storage which traditional banking and other corporations do not have. Thus, anonymity and privacy were not emphasised in the original design. However, with the advent of the internet and social media, people have embraced the fact that in the digitally connected world, lack of data security and privacy is the most important issue to overcome in the decentralised Web 3.0 ecosystem.
The growing popularity of Bitcoin and cryptocurrencies are garnering a widespread attention not just among ordinary users, but it also attracts scammers, hackers and government surveillance firms. Illicit activity involving Bitcoin and cryptocurrencies have been increasing as criminals sought the new form of currency as the FIAT currency replacement to money laundering and other illegal transactions. Unfortunately, the peculiarity of cryptocurrencies is such that the entire transaction record recorded in the blockchain is accessible to anyone, allowing not just law enforcement agencies, but bad actors to track user’s Bitcoin transactions with the help of blockchain analysis tools and malware injection to the victim’s computer. It is undeniable that every Bitcoin user faces the risk of having their personal information and Bitcoins stolen by these syndicates. For instance, hackers could analyse their victim’s transaction and determine the Bitcoin address, and plot a highly orchestrated attack via email and other illegal means to identify the ownership of the Bitcoin address. The most recent case happened in April this year, where a UK company had paid US$2.3 million worth of Bitcoins to hackers, after a ransomware attack on their systems.
2. Reducing taxes from the government
While it may be a touchy subject to ordinary people, tax evasion is very common to companies and Ultra High Net Worth Individuals (UHNWIs). Traditionally, it is known around the world that these groups of entities and individuals parked some of their assets and investments to safe haven countries like Belize, Hong Kong, Malta, Monaco and the British Virgin Islands. However, there is a large gray area between what is legal and what is not when it comes to tax evasion. The growing popularity of crypto trading and mining have been identified by some countries such as the US, where users are obliged to pay taxes based on the annual income generated by these activities. For ordinary Bitcoin investors who are seeking similar tax breaks from the government, it is possible to utilise a Bitcoin mixer to hide their traces.
3. Not that private with privacy coins
Although privacy coins such as Monero and ZCash are meant to allow untraceable transactions, it is believed that such privacy-focused cryptocurrencies are not as anonymous as they claimed to be. For example, Monero thas recently upgraded its privacy technology to include Ring Confidential Transactions. As the name implies, it is supposed to offer confidential transactions on the Monero blockchain. Unfortunately, researchers were still able to identify real coins from the spoof coins used to mask the transaction 45% of the time.
4. Hide sensitive transaction activity from prying eyes
Almost everyone has a hidden secret which they do not prefer to be disclosed for the fear of severe repurcussions to their daily lives. Some people are addicted to gambling, while others frequent adult websites in search of fantasy not found in their real life. There are even philanthropists who wish to donate anonymously to charity organisations which they prefer. Regardless of the reason, people have been looking into several methods to conceal their data and transaction activities. A growing number of people are aware of Bitcoin and cryptocurrencies like Verge, where they thought that paying for services using cryptocurrency will ensure their anonymity. However, it is far from the truth since most transactions including Bitcoin’s are susceptible to traceability and subsequent disclosure by anyone who knows their Bitcoin addresses.
5. Privacy is the fundamental of human rights
Finally, for many people especially millennials, privacy is a fundamental right in this day and age. Technology has always been intertwined with privacy protection. For instance, our ability to protect our own privacy is greater today than ever before, yet the capabilities that now exist for surveillance are without precedent. Legal compliances such as KYC verifications and personal information data stored on Facebook, Google could act against anytime since such information is managed by the central authority. This is one of the main reasons that draw crypto advocates to Bitcoin, cryptocurrencies and blockchain.
New era for the privacy-first society
Hyperconnectivity greatly benefits everyone in the world with convenience and easy access to various knowledge and information. Blockchain and cryptocurrencies are one of the main drivers for the introduction of Web 3.0. Despite the advantages blockchain and crypto could offer us in the years to come, privacy and anonymity remain as a major concern for developers and technology companies to resolve. Meanwhile, as more people see the potential in Bitcoin and the rest of the cryptocurrency market, using third-party Bitcoin mixing service could not only ensure the anonymity and privacy of the user’s transaction, but perhaps set a precedent for the future of Web 3.0, blockchain and cryptocurrency into building an effective privacy solution for the people.