1
Basic Questions about Cryptos / Basic Concepts Of Bitcoin Mixers
« on: April 20, 2024, 03:44:15 PM »
Introduction
As more mixing services become available in the Altcointalks community, it's important that everyone who comes across them genuinely has a basic knowledge of what they do. Understanding the entire concept of how mixing works might not be too necessary for everyone, especially when we are not the ones offering the service. However, with just a basic knowledge about them, everyone would understand their importance to cryptocurrency in general. This post provides basic knowledge only and does not go in details.
What's a Bitcoin mixer ?
Bitcoin mixers, also known as Bitcoin tumblers, are software or services that let users mix their coins with other users in order to further increase the privacy of their Bitcoin transactions. Bitcoin was the first cryptocurrency to use the tumbling service, though other cryptocurrency can use a tumbler.
Ideally, Bitcoin addresses are partially anonymous, which means they don't directly reveal the identity of their owner, but they can still be linked to real-world identities.
The Blockchain, which happens to be a public record of Bitcoin transactions, contains every stamped, dated, and transferred transaction that is stored. Any transaction on almost all blockchains is public, which means you can easily see and track where all the money is going.
The ability to view one's wallet address and see where money is coming from and going to is a big privacy risk for individuals. The purpose of a tumbler is to create privacy around the cryptocurrency that you own.
In recent times, some have argued that mixing and tumbling are two different terms. They propose that Bitcoin tumblers are services that mix coins from multiple users, while Bitcoin mixers are services that break up the transaction history of Bitcoin. Whichever concept is aligned, the main purpose is to provide anonymity to those who use it.
Types of Bitcoin Mixers
Centralized Mixers: are Third-party mixers that accept Bitcoin payments, mix them with other Bitcoins and send the equivalent amount to the required address for a fee.
Decentralized Mixers: are Mixer services that utilize open-source protocols, such as Coinjoin, combine Bitcoin into a single large transaction and redistribute it to the destination address. This process is similar to centralized methods, but it's automated and doesn't involve third parties.
Note that the most popular mixing services are currently centralized.
Why would you want to mix your coin?
Financial privacy is a key concern for both users and non-users of cryptocurrency. Traditional financial institutions such as banks do not provide this level of privacy, as they can disclose information to law enforcement agencies or governments at any time. When it comes to mixers, the guarantee of your privacy depends on which mixing service you use.
How do I identify a Good mixing service?
This happens to be a critical part that everyone must take seriously. The internet is currently flooded with lots of false mixers that use links similar to true mixers. These false mixers sometimes design their platforms to mimic the original in order to lure people.
When choosing a mixer, it is required that everyone conducts proper research on how long the particular mixer has been operating. Try to find out from others who have had personal experience (though don't believe everything), and start by mixing smaller amounts (which is where the risk comes in).
Note: Coinjoin as mentioned above, according to investopedia.com is an anonymization strategy that protects the privacy of Bitcoin users when they conduct transactions with each other, obscuring the sources and destinations of BTC used in transactions.
Information: This post provides basic knowledge about Mixer and nothing more. Choosing to use any of their services after reading this post is at your own discretion. .
Resource: https://youtu.be/vcBXu1I6cGg?si=NlPu46Lkv4lx6UpE
Resource: definition of Coinjoin https://www.investopedia.com/terms/c/coinjoin.asp#:~:text=Key%20Takeaways,the%20coins%20difficult%20to%20trace.
As more mixing services become available in the Altcointalks community, it's important that everyone who comes across them genuinely has a basic knowledge of what they do. Understanding the entire concept of how mixing works might not be too necessary for everyone, especially when we are not the ones offering the service. However, with just a basic knowledge about them, everyone would understand their importance to cryptocurrency in general. This post provides basic knowledge only and does not go in details.
What's a Bitcoin mixer ?
Bitcoin mixers, also known as Bitcoin tumblers, are software or services that let users mix their coins with other users in order to further increase the privacy of their Bitcoin transactions. Bitcoin was the first cryptocurrency to use the tumbling service, though other cryptocurrency can use a tumbler.
Ideally, Bitcoin addresses are partially anonymous, which means they don't directly reveal the identity of their owner, but they can still be linked to real-world identities.
The Blockchain, which happens to be a public record of Bitcoin transactions, contains every stamped, dated, and transferred transaction that is stored. Any transaction on almost all blockchains is public, which means you can easily see and track where all the money is going.
The ability to view one's wallet address and see where money is coming from and going to is a big privacy risk for individuals. The purpose of a tumbler is to create privacy around the cryptocurrency that you own.
In recent times, some have argued that mixing and tumbling are two different terms. They propose that Bitcoin tumblers are services that mix coins from multiple users, while Bitcoin mixers are services that break up the transaction history of Bitcoin. Whichever concept is aligned, the main purpose is to provide anonymity to those who use it.
Types of Bitcoin Mixers
Centralized Mixers: are Third-party mixers that accept Bitcoin payments, mix them with other Bitcoins and send the equivalent amount to the required address for a fee.
Decentralized Mixers: are Mixer services that utilize open-source protocols, such as Coinjoin, combine Bitcoin into a single large transaction and redistribute it to the destination address. This process is similar to centralized methods, but it's automated and doesn't involve third parties.
Note that the most popular mixing services are currently centralized.
Why would you want to mix your coin?
Financial privacy is a key concern for both users and non-users of cryptocurrency. Traditional financial institutions such as banks do not provide this level of privacy, as they can disclose information to law enforcement agencies or governments at any time. When it comes to mixers, the guarantee of your privacy depends on which mixing service you use.
How do I identify a Good mixing service?
This happens to be a critical part that everyone must take seriously. The internet is currently flooded with lots of false mixers that use links similar to true mixers. These false mixers sometimes design their platforms to mimic the original in order to lure people.
When choosing a mixer, it is required that everyone conducts proper research on how long the particular mixer has been operating. Try to find out from others who have had personal experience (though don't believe everything), and start by mixing smaller amounts (which is where the risk comes in).
Note: Coinjoin as mentioned above, according to investopedia.com is an anonymization strategy that protects the privacy of Bitcoin users when they conduct transactions with each other, obscuring the sources and destinations of BTC used in transactions.
Information: This post provides basic knowledge about Mixer and nothing more. Choosing to use any of their services after reading this post is at your own discretion. .
Resource: https://youtu.be/vcBXu1I6cGg?si=NlPu46Lkv4lx6UpE
Resource: definition of Coinjoin https://www.investopedia.com/terms/c/coinjoin.asp#:~:text=Key%20Takeaways,the%20coins%20difficult%20to%20trace.