Bitcoin Mixer: Understanding, Purpose, and Usage

Although blockchain transactions are anonymous, all operations are publicly admissible, you can find information about the wallet and the amount of money received and sent at a certain time, further, the wallet can be easily linked to its owner. To provide more anonymity, crypto mixers were invented. In this article, we have prepared a detailed guide on how Bitcoin mixers work and we will also share examples of some mixing services.

What Is a Bitcoin Mixer?

Bitcoin mixer is a facility that allows you to transfer cryptocurrency in such a way that it is almost impossible to find the relationship between the sender and the recipient. The mechanism of operation resembles a mixer, which is where the name comes from.

Users send their Bitcoins to the service, where they fall into one pool, where all coins are broken down into satoshis and mixed. Often these services have their pool of currency that also participates in the mixing. After shuffling, the coins are sent to the address specified by the customer, they do not go back unless you specify the same wallet from which the cryptocurrency was sent to the service. 

To prevent a user from receiving their coins, Bitcoin mixers separate them and do not use them in mixing. Also, to increase anonymity, several intermediate transactions between different wallets are conducted before sending funds to the final destination. This helps reduce the chances of finding a connection between the service user and the wallet to which the funds will arrive, even when it is the same address.

How Does a Bitcoin Mixer Work?

A BTC mixer is a service that divides sent coins into small batches and subsequently mixes them with other operations. After mixing, the recipient receives the amount of BTC that was sent to their wallet. However, these are not the same coins as parts of them have been mixed with other coins in the pool. This makes it difficult to track BTC and breaks the connection between those particular coins and the person who sent them. Mixer owners charge a transaction fee for services ranging from 0.5% to 3%. The newly created address that users want to use for transactions is only valid for 24 hours. After that, it can no longer be processed.

However, even mixers can be vulnerable to software that is specifically designed to de-anonymize transactions. Therefore, several rules must be followed when mixing coins:

• There must be a time gap between transactions in a mixer. If the transfers come one after the other, it allows us to calculate the movement of funds;
• The number of inputs and outputs must be different. In other words, if you send 2 BTC to a mixer, it will be suspicious if the new wallet receives the same 2 BTC in one transaction. For anonymity, the amount should be split into several small ones and at time intervals be transferred to a new wallet;
• It is undesirable to use one wallet several times in a row. This allows special software to identify the owners.

The Fundamental Purpose of Mixers

In the early days of the cryptocurrency industry, Bitcoin was considered a completely anonymous financial transaction tool. However, like most cryptocurrencies, BTC has lost its privacy through wider distribution. More and more countries are mandating cryptocurrency exchanges and other cryptocurrency platforms to introduce obligatory KYC verification for all users, which involves providing identifying documents. Ubiquitous KYC checks are the new reality of the crypto industry. Passing verification on a cryptocurrency exchange increases the safety of crypto assets and serves as additional protection in case of problematic situations. However, not all users are willing to sacrifice their anonymity. This is especially true for owners of large amounts of BTC, who do not want anyone to become aware of their status for security reasons. Similar to traditional money, few people want to tell about the amount of their savings and if this information falls into the wrong hands, all their savings can be quickly forgiven. Bitcoin mixers solve this problem and allow you to keep secret the amount of BTC or other cryptocurrencies a user owns.

Bitcoin Mixer Types

A bitcoin mixer is a software or tool that mixes the coins of multiple users on a single platform to prevent them from being traced back to their source. This service is also known as bitcoin tumbler or bitcoin blender.

All transaction anonymization services are divided by the principle of operation into two types:

• Centralized Bitcoin mixers are the first generation of services, where the level of anonymity depends on the total number of users, and the safety of use depends entirely on the professionalism and honesty of the developers of the service. They belong to a private company or person and are managed by them. Consequently, you resort to using a third-party service to mix coins and maintain anonymity. Centralized mixers usually charge a commission of up to 3% or higher. They are convenient, but have one major drawback the user has to trust the owners of the service and be assured that they won’t just disappear with the coins they receive. There is also a chance that a centralized mixer stores transaction logs (for example, for debugging purposes). These logs could get to unwanted parties and violate privacy. 
• Peer-to-peer (decentralized) mixers were developed as an alternative to the flawed model of centralized Bitcoin mixers. A Bitcoin tumbler in this case serves as a platform where users who wish to anonymize funds can interact without an intermediary. To do this, multiple users join together in a peer-to-peer group and form a transaction that goes through several stages before traveling to its destination from one user to another. None of the participants in the transaction know any data about the other users and the mixing stages, and the service’s lack of involvement in mixing eliminates the possibility of stealing participants’ funds. The payout of anonymous transactions is randomized to a random number of coins, which adds up to the amount needed for the payout. However, this option is more technically complicated for application, so it may not be suitable for beginners. Also, for the mixer to work effectively, it must be used by a sufficient number of clients regularly.

5 Best Bitcoin Mixers

There are many Bitcoin mixers available, but not all of them are the same. Some mixers are known to be not honest while others charge high fees, so choosing one is a difficult task. Below is a list of the current best Bitcoin mixers and tumblers, their features, pros, and cons.

1) CryptoMixer 

This Bitcoin mixer positions itself as the most adapted to the requests of the community and aims to gain the trust of a large number of users.

Features:

• Unique mixing algorithms.
• No problems mixing large amounts thanks to the available reserve of 2000 BTC.
• Low commissions, discount system.
• Round-the-clock technical support.

2) ChipMixer

ChipMixer is one of the most trusted Bitcoin tumbler services that gives you full control over the mixing process and does not charge a service fee. ChipMixer does not require you to create an account and does not create any links between individual visits to the service.  With ChipMixer, you place bets using the chips provided for a chance to win twice as many Bitcoins as you contributed.

3)  MixTum 

This Bitcoin mixer was launched in 2018, the peculiarity of which is the use of the Jambler.io platform. The essence is that when mixing BTC, the service does not shuffle between free funds on its accounts, but applies coins bought on crypto exchanges. At the same time, thanks to the huge turnover of exchanges, transactions are guaranteed to be clean. The purity of incoming coins is verified by built-in algorithms.

4) Mixtura 

Mixtura guarantees to receive cryptocurrency with a positive history from cryptocurrency exchanges in Europe, Asia, and North America. Coins arrive in installments randomly from different geographical locations to multiple wallets. Bitcoin Mixer 2.0 algorithm with a new encryption algorithm is used.

5) Anonymixer

The creators claim that when using their service, no one will be able to determine that you used a Bitcoin mixer.

The service provides a letter of guarantee in PDF and text format. You can work with the resource both using JavaScript and without it. The second option is considered safer. It is convenient to work with the site from mobile devices.

Pros and Cons of Using a Bitcoin Mixer

In theory, crypto mixers work flawlessly. But not always sites function perfectly, and the mixing itself does not always go smoothly. Experts have already calculated the probability of decrypting the mixer. It is about 95%, and the decryption itself was made possible by clustering analysis. In 2024, the decryption of Bitcoin mixers is indeed possible.

Two projects, Bitfury and Chainalysis, have developed algorithms that can identify linked Bitcoin addresses with high accuracy. Of course, this puts the mixers’ customers in some danger. These algorithms can identify a person, and in addition, show the public who is using a Bitcoin mixer.

A large number of scammers in this field is another significant problem. They have nothing to fear because a person who has been cheated will not go to the authorities. And even if they do, there is no one to catch, because even crypto has not yet been fully covered with a decent legal framework, much less individual projects. There is no regulation in this area. And the work is based only on trust, which is often abused.

There is a risk that a user or a person to whom the crypto came through the mixer will receive “dirty” crypto as a result of mixing the sender’s coins with illegal bitcoins of other clients. Sooner or later, government agencies may take on cryptocurrency violators and find you, among others. 

Pros:

• High privacy;
• Possibility of clearing Bitcoins of questionable origin.

Cons:

• Risk of disclosure, including the danger of being dragged into an investigation for crimes you didn’t commit.
• Lack of 100% guarantee of anonymity, no matter who promises that.
• A lot of fraudulent projects.

The Legality of Bitcoin Mixers

Legislation is very inert and in many countries it has not yet reached cryptocurrencies, let alone more advanced projects related to them. In about 5-10 years there may be some legislative basis for them as well. At least now, BTC mixers are not banned, they can be used without restrictions.

If you are in a country where it is forbidden to store and conduct transactions with crypto, remember that in this case, the use of mixers is mandatory. If you don’t use them, there is a real, albeit small, risk of exposing your wallet to people who will eventually be able to link transactions to your data.

In most countries of the world, you can use cryptocurrencies and everything related to them, but there are exceptions, for example, China. And that, countries with backward political views are also gradually legalizing crypto as they begin to understand its full potential.

FAQ

What is the purpose of using a Bitcoin Mixer?

Tumblers help cryptocurrency holders diversify their portfolios without fear of losing privacy during crypto bargains. For legitimate users, this privacy means an extra layer of protection from cyber criminals who may steal their records or marketers who intend to use their data to promote a product or service.

These privacy tools are also useful for people who want to donate generously but anonymously.

Can using a Bitcoin Mixer protect me from all forms of surveillance?

Mixers are an efficacious means of maintaining privacy in the pseudo-anonymous Bitcoin environment and can be a useful tool for those looking to avoid government surveillance. Mixers and private wallets based on them will likely continue to operate in most countries, but will somehow have to part ways with the concept of complete anonymity if it is a government requirement.

What are the risks of using Bitcoin Mixers?

Bitcoin mixing is no different than any other exchange system; it has its share of threats and hazards.

First of all, they are not full-fledged poison pens. A Bitcoin mixer will still know your IP address and can potentially track your personality. Another danger is that if the Bitcoin mixer is hacked, your BTC could be stolen. Finally, if the government decides to crack down on BTC mixers, they could be shut down and you could lose your Bitcoins. BTC tumblers are sometimes related to money structuring, possible fraud by the service theft of sent coins, and other illegal activities.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.