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A Complete Guide to Bitcoin Mixers

Hassan Mehmood

ByHassan Mehmood

Mar 26, 2023

With the widespread acceptance of cryptocurrency around the globe, hackers and scammers have found new ways of tracking down crypto investors and getting their Bitcoin away from them. On the other hand, things like bitcoin mixers are very concerning for governments around the globe. That is because cryptocurrency mixers make it really hard for financial security agencies to track down terrorists and scammers.

Cryptocurrency mixers are used by people who want to keep the data of their cryptocurrency transactions private and away from the eyes of the government. This is a free way of making all of your bitcoin transactions private and impossible to trace.

However, cryptocurrency mixers provide a very big threat to tax collection agencies around the globe as they can help wealthy people conceal their wealth without letting their government know. Moreover, tools like these hello corrupt politicians and terrorists to launder money across different borders without going through any security checkpoints. For a comparison, mixers have processed around 25% of all the Bitcoin transactions made to this day, and the amount transferred through exchanges sits around 75%.

Types Of Bitcoin Mixers

There are two types of bitcoin mixers in existence. Let’s discuss both of these types briefly.

  • Centralized Mixers

For simple tumbling, centralized mixers are used around the globe. These are actually companies who receive bitcoin and send back different bitcoin for some fee.

  • Decentralized Mixers

Decentralized mixers, on the other hand, use specific decentralized protocols to receive a huge sum of bitcoin from our user pool and then send back the randomized bitcoins to all the participants. In these types of mixers, no one knows who got their bitcoin and where their own bitcoin came from.

There are lots of other types of bitcoin mixers in use as well, but most of these have been debunked by government agencies and are not as useful as they once used to be.

Types Of Coin Mixing Services

There are a total of two types of coin mixing services. Let’s discuss them briefly as well.

  • Custodial Mixing Services

In custodial mixing, you send your bitcoin to a trusted third party and receive clean bitcoin after a fixed amount of time. However, the biggest flaw in this type of mixing service is that you have to give charge of your money to someone else, and they might steal your money and run away with it.

  • Non-Custodial Mixing Services

In non-custodial mixing services, trusted third parties are replaced by verifiable smart contracts. There are two steps of a non-custodial mixing service.

In the first step, you have to send any cryptocurrency you have to the mixer address from one account, and after a fixed amount of time, you can receive the same amount in another account.

Non-custodial mixing services can use highly confidential methods to deposit bitcoin into your wallet. This illuminates any chances of the transaction getting traced.

How Do These Mixers Work?

In a normal bitcoin transaction, the bitcoin will go from your wallet to the receiver’s wallet. The whole transaction is recorded on the blockchain. However, if you use a mixer in the transaction, your bitcoin will first be deposited in the mixer, where a large pool of bitcoin is distributed between every depositor. The bitcoin is then randomized and sent to the required address.

This is a smart way of keeping yourself away from government agencies. When you use a bitcoin mixer in any transaction, it will make it impossible for any inspector to establish a direct link between you and the receiver’s account.

Are Bitcoin Mixers Even Legal?

Since bitcoin mixers can easily randomize any bitcoin transaction, they can also be used by criminals and terrorists around the globe to make their transactions and money laundering actions secret. This makes it nearly impossible for security agencies to track down criminals and freeze their assets.

However, one cannot say that bitcoin mixers are only used for illegal purposes. Mostly, these mixers are used by regular bitcoin investors who want anonymity in their transactions. As far as the legality of bitcoin mixers is concerned, it depends on the location of the user using the mixer.

In the United States, bitcoin mixers are illegal, and several mixer founders have been arrested. They allegedly helped several people launder their money offshore safely. The European Union has also made clear laws regarding money laundering. These laws also apply to mixers, and they make these mixers less valuable for regular Bitcoin users.

In other parts of the world, your exchange might flag your transaction if you are found using a mixer. A few exchanges have taken steps to cut down the use of mixers by their users by suspending the accounts of the people they have found using mixers.

Why Are Bitcoin Mixers Used?

When it comes to privacy and anonymity offered by bitcoin and other cryptocurrencies, there are lots of misconceptions that need to be cleared. You should keep in mind that your identity is not fully covered by the eyes of the government if you are holding any type of cryptocurrency.

As far as the Blockchain is concerned, any person can view your transactions easily if they want to. While your real name is not used on the blockchain, your user ID can still be linked to your real word details.

Whenever you use a centralized exchange to make any bitcoin transaction, your KYC information, which is linked to your real word identity, can easily be detected by the exchange owner. There are lots of similar techniques used by government identities and exchanges around the globe to reveal the identities of cryptocurrency holders. Block Jane analysis is an easy way of linking your real identity to your exchange username.

Many people see this as a beneficial feature offered by cryptocurrencies as it helps identify any bad people who might try to use cryptocurrency for bad purposes. Blockchain is a public ledger introduced to hold everyone accountable. On the other hand, many people prefer complete privacy when making bitcoin transactions. While there are lots of methods to conceal your identity when making bitcoin transactions, using bitcoin mixers is one of the most popular ones in use these days.

Benefits Of Bitcoin Mixers

If you want to maintain your privacy when making bitcoin transactions, using bitcoin mixers is the way to go. There are special bitcoin mixers which can break down your transaction into several small pieces and make it nearly impossible for authorities to track it.

By using a bitcoin mixer, you can make bitcoin transactions with peace of mind knowing that no one will be able to track or hack your account. These mixers are usually not paid, and all you need is a stable Internet connection, and you are good to go.

Here are some of the best-known benefits of bitcoin mixers.

  • Anonymous Transactions

Using a bitcoin mixer is one of the safest things you can do to make your bitcoin transactions anonymous. These mixers work in a specific way to protect your identity when making online transactions. They also use internationally recognized safety standards to keep your money safe in the process. So, for bitcoin owners who want to avoid unnecessary direction, bitcoin mixers are a safe haven. When your transaction is broken down into numerous small pieces, it will become impossible to fully track it.

  • Fast Processing

Believe it or not, bitcoin mixers can actually help in making your bitcoin transactions faster. They do it by breaking a large transaction into small pieces. This way, you won’t have to wait for a long time to see your transaction go through. By using these mixers, you can receive any quantity of bitcoin the same day you transfer it.

  • Ease Of Use

Using a cryptocurrency mixer is one of the easiest things you have to do since no technical experience is needed. Literally, all you have to do is open an account with the mixer company, transfer your coins into your new account, and you will start mixing right away. Using this service is way better than making several accounts to break down your transaction manually.

  • More Accessible

Bitcoin mixers are as easy to access as any other thing present on the Internet. You do not even have to worry about a stable Internet connection after pressing the send button. Various bitcoin mixers have mobile-friendly websites, and you can access your funds from anywhere around the globe on any device. The whole purpose of bitcoin mixers is to provide you with ultimate convenience, and they do just that!

  • Little To No Fees

The majority of the well-known cryptocurrency mixers charge very low fees. When it comes to comparing different ways of making your bitcoin transactions anonymous, you will find out that cryptocurrency mixers are the cheapest ones out there.

These were some of the best reasons to use cryptocurrency mixers in your transactions. They help you stay anonymous and away from the prying eyes of hackers and governments around the globe.

A Few Problems With Bitcoin Mixers

Just like everything else in the world, bitcoin mixers come with their own flaws and disadvantages.

  • One of the biggest flaws of this system is that if two users send the exact same amount of bitcoin at the same time, a law enforcement agency can mistake you for someone else. The bigger the mixer, the harder this problem gets for law-enforcement agencies around the globe to solve.
  • Moreover, many exchanges are taking steps to minimize the number of coins sent or received through their platform. They usually do not allow your bitcoin to leave the exchange if you are caught using a mixer, and you can’t even receive bitcoin sent by an address which reflects a bitcoin mixer. So, your cryptocurrency might get labelled as “tainted” if you go through this process.
  • Some bitcoin mixers use less effective technologies, and they might even fail to make your transaction fully anonymous.

So, before you use any bitcoin mixer for your transaction, do your due diligence to avoid any mishaps from happening.

Risks Of Using Bitcoin Mixers

Most of the bitcoin mixers have the same problem, and that is regarding the anonymity of transactions they deal with. By using a mixer, you will have to blindly trust the third party to keep your transaction data private. Just in case the mixer gets breached, or its owner is willing to share the private transaction data with the authorities, you will lose your privacy immediately.

Globally trusted bitcoin mixers like CoinJoin, have introduced transaction merging techniques and smart contracts, which do provide the users with a high level of privacy, but some transactions are still trackable as their output isn’t 100% secure. The higher the number of transactions, the more difficult it is for anyone to single out a specific transaction.

If you are a bitcoin investor and need anonymity while sending tokens to your wallet, you can use the CoinJoin functionality of the Wasabi wallet. While the wallet is basically centralized, it is designed so that even the owner of the wallet can not deanonymize your transactions or steal anything from anyone.

Most of the bitcoin mixers and digital wallets are limited to desktops only. Therefore, you should stay away from clone mobile applications as they can steal all of your money. However, the Samourai wallet does offer full privacy and mobile support. To use the wallet, you’ll have to connect it to your Bitcoin node.

Even though bitcoin mixers are not yet fully illegal, several exchanges might refuse to accept your transaction if your account is linked with a bitcoin mixer address. The use of these mixers is increasing every day as more people prefer privacy and complete anonymity while making bitcoin transactions.

How To Use A Bitcoin Mixer?

Contrary to popular belief, using bitcoin mixers online is really easy, and there is nothing technical involved in the process.

Let’s discuss a few steps you need to take in order to mix bitcoins successfully before any transaction. However, the order and number of these steps might vary depending on the bitcoin mixer you are using.

  • First of all, you should find a trustable bitcoin mixer. This is one of the most important steps as an untrusted service provider can run away with your money without leaving any trace. So, lower the risk as much as possible by finding a trustable bitcoin mixer.
  • In the second step, you will need to make an account with the mixer service. For this, you should visit their website directly. Not every bitcoin mixer requires you to make an account with them in order to make your transactions anonymous. However, wherever needed, make sure that you double-check the website address to avoid any fraud.
  • If you have made an account with the bitcoin mixing service of your choice, they will then require you to deposit the required amount into their wallet to start the mixing process. On the other hand, platforms which do not require you to sign up with them will provide an address for you to send bitcoins.
  • After sending the bitcoin, you have to provide one or several addresses where you want to receive your money. The website will require you to enter the destination address or addresses at the time of account creation.
  • You can also use a delay time option to delay your transaction for a specific period of time. You can either receive your bitcoin instantly or delay the transaction by several days if you want to.
  • In some cases, you will also be asked to choose between the company’s private assets or bitcoins from other users. You can also choose to mix both of these options according to your needs.
  • After going through the whole process, the website will provide you with a letter of guarantee mentioning that your transaction has been accepted, and you will receive the coins back within a specified time period.

After going through all the above-mentioned steps, you will have to wait for some time to receive your coins in the destination wallet. If you have selected the delay time, you should expect to receive the coins by the end of the time. Otherwise, check out with the company‘s customer service to find out their usual delay time.

Last Words

While Bitcoin and other coins do provide a level of decentralization, they are still not fully anonymous. Therefore, services like bitcoin mixers are necessary to make every bitcoin transaction anonymous and fully private. This provides every bitcoin investor with complete peace of mind when dealing with their money.

Moreover, using bitcoin mixers has been made really simple. A person who can use a digital wallet can easily understand the working principles of a bitcoin mixer, and he should face no difficulty in using it.

Governments around the globe continue to restrict the use of bitcoin mixers since they need to track down criminals and terrorists trying to launder money across borders without going through any security checkpoints. However, this does not necessarily mean that bitcoin mixers should be illegal.

Hassan Mehmood

Hassan Mehmood

Hassan Mehmood, a valued writer at Big Trends Signals, uses his profound online trading expertise to produce in-depth guides and unbiased reviews, enabling traders to navigate digital marketplaces efficiently.

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