The essence and principles of bitcoin mixer
Cryptocurrency has a number of key differences compared to fiat – decentralization, reliability and anonymity. All these things contribute to the popularity of digital money. However, the declared anonymity of Bitcoin still does not guarantee 100% protection from tracking, because the data on all completed transactions is still recorded in the blockchain. Any user can easily track the path of bitcoins before they get into a particular wallet. A bitcoin mixer
or toggle switch is an application or a website that helps to “cover the tracks”.
What is a bitcoin mixer?
Some participants of the system use the blockchain to receive illegal payments and thus evade taxes. Nevertheless, even if bitcoins are obtained honestly, many users fear for their safety due to the imperfect anonymity of this system.
Anyone can get data about the transactions history, find out their exact amount and date, and even get the information about the wallet where the cryptocurrency is stored now.
Bitcoin mixers can help to protect against such close attention. A service like this takes coins from different users and puts it on its own balance, and then a special algorithm mixes gained bitcoins. After this operation the cryptocurrency is transferred to the clients' wallets again.
This method helps to achieve almost one hundred percent anonymity so that tracking a particular transaction becomes impossible. A certain amount of coins may be added to the toggle switch, after mixing they are output in parts in several stages. Therefore, it becomes impossible to identify each system participant.
Why do we need to use a mixer?
Ordinary users understand Bitcoin anonymity
not quite right. A coin is anonymous because there is no need to enter personal data or expose the details of a bank card to receive it. Quite the contrary: there is practically no information about the user in the system, his wallet is not personalized.
However, all transactions are recorded and identified in the blockchain network. In fact, this is a large database that contains a detailed report on all transactions. The transfer of money can be traced if a person decides to cash out a cryptocurrency using any exchanger, after this withdraw money to the card and use it to pay on the Internet. At best, the controlling authorities will require this person to explain the origin of this money. At worst, a hacker will track operations, because the database is completely transparent.
You can think that once your personal data is not directly included in the network, it means there is nothing to worry about. However, this is just an illusion of security. Ample evidence that the state is monitoring cryptocurrency operations are the arrests of criminal elements. Mainly large transactions come in contact with the law, but there is no guarantee that even a legitimate small transfer will not be the subject of attention.
How to use a bitcoin mixer?
It is advisable to enable a proxy server before using the mixer, which will provide additional protection against tracking. Alternatively, you can try to connect through the Tor browser. Usually there is no need to register as a new user or there is some minimum required like coming up with a password and specifying the address of a wallet.
Conditions of interaction for each service may differ, but the scheme is always the same: a client deposits funds to the address specified in the order, pays a fee for the service, and then the mixing starts. Anonymous coins come to a specified wallet. Some portals prescribe individual criteria and conditions, for example, set the minimum amount for the input/output. A user must keep a special guarantee letter with the wallet address and code while using a mixer. This data must be specified to withdraw funds; this is a kind of proof.
The speed of the service is directly dependent on a number of confirmations required by the client. You can further complicate tracking by using pending operations. The more transactions like this, the more reliable is mixing and the higher is the guarantee that a history cannot be traced.
Additional recommendations that help to make the mixing process more confidential:
- set the maximum delay on the output;
- divide a deposit into several parts, use different mixers for mixing;
- withdraw funds in parts to different wallets.
You can use these mixers on a legal basis. The legal status of cryptocurrency is still undefined in most countries. They try to regulate the process of its use, but there is no direct interdiction on digital currency usage. Moreover, applying of mixers significantly increases the security of crypto active usage. Otherwise, anyone with minimal skills will be able to find out where the crypt came from and where it went.