Bitcoin Mixers – How they work, and are they legal?

Some say bitcoin mixers are a form of money laundering. In-fact, the purpose of mixing you coins is to hide their origins. Bitcoins blockchain, and its transparent nature allows transactions to be traced. For this reason users shopping on the dark-net use such services to protect their identity. Despite sounding highly illegal, they are not. Mixers can be used, as long as one is not covering up illicit activity.

Why use cryptocurrency mixers?

It is unknown when the first coin mixer was created, but the concept dates back many years. Many dark-net markets featured built in mixers in the past. Their rise in popularity has been associated with advancing blockchain surveillance technology. When bitcoin was first released most praised it for being anonymous. The reality is that it’s not as anonymous as many like to think.

The transparent nature of bitcoins blockchain means that with enough data people can be traced. This was especially fueled by the implementation of more advanced KYC and AML regulations. Most exchanges are now forced to keep track of addresses and who they belong to, with that data being accessible to governments.

How Bitcoin Mixers work

The Bitcoin mixing concept is fairly simple, and just like the name suggests. Coins received from people looking to hide their identity are broken into small amounts and shuffled around wallets. The end result are batches of coins that are from multiple sources and mixed up. This means that no one can tell whose coins you have as they will appear to be from multiple different sources.

There are many implications to this model. One notable one is that you have to trust the mixing service itself. Keeping a internal logs of who received what transactions is more than enough to link one to his previous address. Another issue with this approach is that one can be coincidentally mistaken for another criminal.

Should you use bitcoin mixers?

Most crypto mixers seem to do a great job and achieve their purpose. As mentioned above the only concern in this field are the mixers themselves. If you trust that a platform is not keeping any logs then it is a recommended choice. For any users looking for utmost security the recommendation is to go with privacy coins like Monero or Stellar. Their private nature makes it nearly impossible to track transactions.