Basic Concepts Of Bitcoin Mixers

[Tribalchief]

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.

[Z-tight]

This is a very good post, especially for people who do not know how mixers work. I know the government and centralized institutions are against privacy solutions, but BTC users must understand how important privacy is in the network and using mixers is a good way to enhance your privacy.

Some people even believe that you need to have something to hide before you use mixers, which is so wrong. Unijoin, which is a recommended mixer posted an article on this some weeks ago, and it is a good read for those who are interested:
https://unijoin.medium.com/why-do-we-need-to-protect-our-privacy-528b0a2dd22b

[Hatchy]

Nice guide by the way op. At least for those who doesn't know what Tumblers are, can start from here.

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.

They are generally known as tumblers. They're designed to enhance Bitcoin privacy. Whether you call them mixer or a tumbler, they're the same thing. Like you said, most mixing services today are centralized, meaning they're controlled by a single entity and third parties. Only a few, like CoinJoin, operate in a decentralized manner. When using a mixing service be aware that centralized mixers have full control over your coins during the process. So, it's important to research and choose reputable services to avoid the risk of losing coins. Many new mixers are entering the market, but most of them are scams or have ulterior motives. Remember, while increasing your privacy, you should also be smart enough to protect your coins too.

[ABCbits]

Since this thread aimed for beginner, i believe we should mention that some exchange and services reject mixed coin due to various reason. If you still deposit or send your coin to them, usually your account would be frozen and they'll ask for tons of personal information if you want to get your coin back.

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.

I don't know about other people, but personally i don't consider CoinJoin as part of mixer. In past, it's rare to see people use term mixer/mixing/mix when describing CoinJoin. Mixer break transaction history, while CoinJoin usually obfuscate it.

[Tribalchief]

This is a very good post, especially for people who do not know how mixers work. I know the government and centralized institutions are against privacy solutions, but BTC users must understand how important privacy is in the network and using mixers is a good way to enhance your privacy.

Some people even believe that you need to have something to hide before you use mixers, which is so wrong. Unijoin, which is a recommended mixer posted an article on this some weeks ago, and it is a good read for those who are interested:
https://unijoin.medium.com/why-do-we-need-to-protect-our-privacy-528b0a2dd22b

It's high time we start erasing all misleading information about mixers and other crypto related matters. Privacy matters alot especially for those that have choosing to make crypto part of their lives.

Nice guide by the way op. At least for those who doesn't know what Tumblers are, can start from here.

They are generally known as tumblers. They're designed to enhance Bitcoin privacy. Whether you call them mixer or a tumbler, they're the same thing. Like you said, most mixing services today are centralized, meaning they're controlled by a single entity and third parties. Only a few, like CoinJoin, operate in a decentralized manner. When using a mixing service be aware that centralized mixers have full control over your coins during the process. So, it's important to research and choose reputable services to avoid the risk of losing coins. Many new mixers are entering the market, but most of them are scams or have ulterior motives. Remember, while increasing your privacy, you should also be smart enough to protect your coins too.

In as much as we want to protect our financial privacy, we must also be careful with what service we choose to use, because no scam service would return funds after they've scammed their victims. But interestingly, we still have reputable mixers everywhere.

I don't know about other people, but personally i don't consider CoinJoin as part of mixer. In past, it's rare to see people use term mixer/mixing/mix when describing CoinJoin. Mixer break transaction history, while CoinJoin usually obfuscate it.

In as much as I don't want to mention a specific mixing service, the word Coinjoin used in this context isn't relating to a service either. Here is what I meant..

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.

The link to reading more is towards the end of the write up. T for Thanks

[Z-tight]

I don't know about other people, but personally i don't consider CoinJoin as part of mixer. In past, it's rare to see people use term mixer/mixing/mix when describing CoinJoin. Mixer break transaction history, while CoinJoin usually obfuscate it.

Unijoin is a mixer, but it uses the CoinJoin technology. Coinjoin protocols are self custodial and trustless, i.e. WabiSabi, JoinMarket and Whirpool, people who use these protocol remain in control of their funds. Unlike mixers that you have to deposit coins into the address specified by the mixer. This is the big difference between CoinJoin implementations and mixers.

[examplens]

I don't know about other people, but personally i don't consider CoinJoin as part of mixer. In past, it's rare to see people use term mixer/mixing/mix when describing CoinJoin. Mixer break transaction history, while CoinJoin usually obfuscate it.

If you look at the functionality of the Coinjoin method, it has the basic characteristics of mixing. The user sends his Bitcoins with the aim of receiving completely different ones, I would call such a process mixing.
Efficiency is another matter entirely.

[Lucius]

Since this thread aimed for beginner, i believe we should mention that some exchange and services reject mixed coin due to various reason. If you still deposit or send your coin to them, usually your account would be frozen and they'll ask for tons of personal information if you want to get your coin back.
~snip~

There is some truth in that, but still from my own experience it doesn't happen often, at least it never happened to me that someone had a problem because I sent them coins that have their origins in mixers. By that I mean transactions that went from my non-custodial wallet to CEX addresses, but also those transactions that went through payment processors.

Maybe there should be some imagination in all of this, and the already mixed coins should be "stirred" a little more in such a way that we move them several more times to new wallets. Thus, we can make it difficult for those who analyze the blockchain to determine where exactly the coins came from, and the question always arises as to how deep they go with their analyses.

[bitmover]

Since this thread aimed for beginner, i believe we should mention that some exchange and services reject mixed coin due to various reason. If you still deposit or send your coin to them, usually your account would be frozen and they'll ask for tons of personal information if you want to get your coin back.
~snip~

There is some truth in that, but still from my own experience it doesn't happen often, at least it never happened to me that someone had a problem because I sent them coins that have their origins in mixers. By that I mean transactions that went from my non-custodial wallet to CEX addresses, but also those transactions that went through payment processors.

i never had problems as well, but i know some people already had problems.

I usually consolidate my coins from mixers and split them in different addresses, so I usually never send directly from mixers (or from campaigns) to an exchange.

[Lucius]

@bitmover, maybe there is more deception than truth, because considering how big a problem mixers have become for "them", I would not be surprised that most of the problems with mixed coins actually originate from the propaganda war waged by these very same people. They may be solving part of the problem by discouraging people from using any private tools, including mixers, by scaring them that something bad will happen to them.

Likewise, more or less all CEXs do not want coins related to gambling, but people still gamble even more than before using cryptocurrencies.

[bitmover]

Likewise, more or less all CEXs do not want coins related to gambling, but people still gamble even more than before using cryptocurrencies.

I agree. I do the same with coins I receive from casinos. I received a lot of coins from casinos, and also never had problems using them in cex. I also did the consolidation/split in some addresses with them...

[dkbit98]

There is also Joinmarket that is better option than Coinjoin and it is fully decentralized.
I would also add coins that have integrated ''mixer'' in them, for example Monero, that is super easy to use and it's decentralized, that is why regulators don't like it very much
I wish something like this can be added to Bitcoin code, maybe with MimbleWimble like in Litecoin.

[ABCbits]

--snip--
There is some truth in that, but still from my own experience it doesn't happen often, at least it never happened to me that someone had a problem because I sent them coins that have their origins in mixers. By that I mean transactions that went from my non-custodial wallet to CEX addresses, but also those transactions that went through payment processors.
--snip--

That's true, i mentioned that since it's possible some beginner except they won't face any trouble by using mixer or coinjoin. And it heavily depends on which mixer/coinjoin and exchange they use.

--snip--
I usually consolidate my coins from mixers and split them in different addresses, so I usually never send directly from mixers (or from campaigns) to an exchange.

It sounds like exchange you used doesn't perform detailed blockchain analysis, which is good for you.

There is also Joinmarket that is better option than Coinjoin and it is fully decentralized.
I would also add coins that have integrated ''mixer'' in them, for example Monero, that is super easy to use and it's decentralized, that is why regulators don't like it very much
I wish something like this can be added to Bitcoin code, maybe with MimbleWimble like in Litecoin.

But with how Bitcoin community/devs value backward compatibility, it'll be optional privacy feature and those who use it obtain less privacy due to small amount of Bitcoiner who use it.

[Rruchi man]

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.

There are many investors in bitcoins who know nothing about mixers and the services they provide. They are okay with just the anonymity that bitcoin provides, and because they have not been involved in anything illegal, they have had no reason to be concerned about their privacy.

It is not a must for every investor to use mixers.

[NotATether]

They are okay with just the anonymity that bitcoin provides,

*not anonymity

Let's not kid ourselves here, Bitcoin is not *anonymous* like Monero is. It is at best pseudonymous, otherwise we would not have to worry about all these blockchain analysis scrapers compiling data about our transactions.

Mixing bitcoins does not make them anonymous either, it just makes them a little more pseudonymous. It is a limitation of the Bitcoin protocol.