Bitcoin has been around for a while now. Being the primary cryptocurrency on the market, one of the things people have loved is that it was hard to trace back to anyone’s identity. It is possible though Bitcoin addresses can be traced back to a particular user, and that is why Bitcoin Mixers have come into play.
How do bitcoin mixers help with anonymity?
Bitcoin mixers allow many users to exchange bitcoin amongst each other to make their addresses less trackable. When you or I have our bitcoin hosted on specific platforms, people that operate the platforms know that our particular Bitcoin address belongs to us. So, in that way, our identity is not totally anonymous.
Not only that, but when Bitcoin users choose to move their coins from place to place, it puts their personal information at risk. The passing around can reveal how many coins they have available, how they spend their bitcoin, and more.
In general, there is this movement of wanting to have more privacy when it comes to our money, how we spend it, and where we keep it.
When a Bitcoin mixer comes on the scene through software or( some cloud service), it allows various users to mix their coins amongst one another. To have their identities remain cloaked.
Two types of Bitcoin Mixers
There have been quite a few mixed ideas that have been introduced, and some have been developed over recent years. There will undoubtedly be more to come in the future.
The Chaumian CoinJoin Mixers
This set up allows a large group of Bitcoin users to make one large payment amongst themselves. They can merge a large number of transactions together under one new bitcoin address. It can give a certain amount back to each individual, and no one can observe where it’s coming from.
For even more privacy and security, the system can be designed to not even the mechanism that merges the transactions can’t figure out where all the coins went.
The way that centralized mixers work is that they return different coins than what was initially put in. When there are mass amounts of people using this method, it is challenging for anyone to keep track of which coins belong to who. Why? Because different coins are being returned to the user.
However, Centralized Mixers are not without their issues. The bottom line is that Centralized Mixers have to be based on total trust and right-doing by the operators. The Centralized Mixer host or owner knows who made the Bitcoin’s initial deposits, and that’s where the potential risk lies. Since the host knows where the initial deposit came from, information can be sold to advertising parties or partners. They can be lured by a sizable fee to release that information.
Another devastating but yet very plausible event that could happen is that they decide not to return the money, which means that they steal all the money and keep it with no further exchanges being made. Are there warning signs of such activities beforehand? Since these mixers are so new, there’s probably not a list of “watch out for” that we can put before you. One of the most obvious ways is to pay attention to what people are saying on forums and review sites.
So, before you decide to go with any Centralized Mixer platform, make sure you do your homework. Just know that there’s always a risk, even if a particular one has an excellent reputation. Still, it is not without risk. One strategy might be not to put all your eggs in one basket but to try a mix of the two mixer options available. What’s available?
Popular Bitcoin Mixers
More and more options are popping up. The most important thing to be aware of is the features that make it quite difficult or nearly impossible to deanonymize anyone’s identity.
For example, the Wasabi wallet is built with the Chaumian CoinJoin Mixer. Technically it is a centralized mixer, but with a built-in Chaumian CoinJoin, no users can deanonymize other users and steal their funds away. It’s easy to use interface allows users to distinguish between the non-mixed coins and mixed coins.
Another option is called the Samurai wallet. The impressive built-in function they have is called the whirlpool, but in reality, it is the Chaumian CoinJoin feature. As opposed to the Wasabi wallet, the Samurai wallet is available on mobile devices. This particular wallet’s uniqueness is that a user does not have to fully be connected to the bitcoin node. In that way, it offers additional privacy.
Another exciting option is called JoinMarket. Through this option, it allows people to merge large transactions to hide their trail of information. The participants have the option of participating and being incentivized for allowing their coins to be mixed.
All in all, what you are looking for is an option that makes it quite challenging to be deanonymized. A full-blown centralized mixer still has an opportunity for the user information to be revealed. The options that we have explored above each have features built-in that help to determine such activities.
There you have it! Options to help you be more anonymous and keep your bitcoin information safe. As with anything new, make sure you do your due diligence in finding out what will be best for you. Going with referrals can always be helpful, knowing that people you trust have an option working for them.
Regardless of which way you decide to go, always remember that there’s a risk factor. It is advisable not to put your eggs in one basket. Diversifying your bitcoin mixing can help reduce risk.