What is a Bitcoin mixer?

Are you wondering what a Bitcoin mixer is? Read this article for a complete guide about a cryptocurrency money mixer.

Bitcoin mixers are simple solutions that let users mix their coins with other users to preserve their privacy. While Bitcoin addresses do not reveal their owners’ identities, some entities can still link them to real-world identities. For instance, if you withdraw this digital asset from an exchange where you have identified yourself, the crypto exchange automatically knows that the address is yours. More so, more advanced techniques such as blockchain analysis tie these virtual money addresses to real-world identities. 

Furthermore, when coins move from the users’ original addresses, they risk revealing all sorts of personal information. They could also show the number of coins they own, even on other addresses, what they spend their money on, and where depending on how the users transfer the digital currency. Perhaps you can consider sending and receiving Bitcoin on an exchange such as Bitcoin Loophole vital.

On the other hand, if users mix their coins, they can obscure the ties between their Bitcoin addresses and real-world identities. As a result, they are allowed to use this digital money more privately. 

How Bitcoin Mixers Work
Over the years, Bitcoin users have proposed several mixing strategies, ranging from fully centralized solutions to options where users don’t have to trust anyone. Some of the suggested solutions range from those resembling the Lightning Network–Style payment channels to even using privacy coins as an intermediary step in the mixing process. A fully centralized solution is one where all the users trust a mixer. Rather than exploring all potential options, here are two of the most popular solutions today.

Centralized Mixers
These centralized mixers are services that accept this digital money payment and, in return, send different coins. If most people use a particular mixing service, tying incoming digital currencies to outgoing coins will be increasingly difficult for outsiders. As a result, the transaction trail breaks therefore offering privacy to the users.

Additionally, centralized mixers leave two big problems unsolved because, for one, users need to trust their privacy with the mixer. Since the mixer knows which user sent and received which coins, the mixer could re-establish the trail of ownership. Also, the user would lose his privacy if the mixer is willing to share this data with interested parties. Secondly, the mixer could refuse to make the return payment, which implies they are stealing the user’s coins. 

Charmian Coinjoin Mixers
For instance, Charmian Coinjoin mixers let a large group of users cooperate in making one large payment to themselves. In other words, a user can send a hundred transactions of exactly 0.1 Bitcoin to a new address under their control and then merges these one hundred transactions into one significant transaction, meaning they get 0.1 of this digital money back. However, no one can see where they got it from unless the mixers provide the details. ‘

Also, the Charmian Coinjoin mixers design ensures that not even the entity that merges the transaction can figure out the destination of some coins. Also, it can’t steal any coins. Users will not sign the merged transaction if they do not get their 0.1 of this digital money back.

Alternatives to Bitcoin Mixers
Bitcoin mixers are not the only means to hide the flow of this electronic money transaction. Right after hacks, criminals often siphon funds through lots of exchanges using accounts created with cheaply bought or stolen identities. The popular method of chain-hopping relies on law enforcers taking a long time to force crypto exchanges to shut down accounts. And this is somehow risky since it’s difficult for the platforms to spot dodgy accounts in the first place right after passing the Know Your Customer procedures.

The Bottom Line
A Bitcoin mixer is a company that accepts this virtual currency and then sends it back to you at a fee. Thus, using a Bitcoin mixer, you can mix your Bitcoins with other users to preserve your privacy.