Nakamoto Satoshi, the Bitcoin founder had a dream of building a digital currency that users could use conveniently and anonymously. However, the present Bitcoin and most digital currencies barely meet up to what Satoshi envisaged.
Nevertheless, we cannot fully blame the founders of these digital currencies for their inability to meet with the Satoshi vision. The fact remains that governments are fiercely independent. None would have its monetary systems willingly compromised through anonymous, perpetually sustained movement of funds.
This is the reason compliance to monetary policies has sometimes guided inventors of digital tokens. This also is the reason Bitcoin is not fully anonymous and why Bitcoin mixing services exist.
What is Bitcoin Mixing?
A Bitcoin mixing service is a platform designed to enhance the anonymity of Bitcoin. This is accomplished by obscuring transactions or movement of bitcoins from wallet to wallet thereby enhancing the privacy of coin owners.
With a Bitcoin mixing service, you simply send your bitcoins to a mixing service that ‘obliterates’ the transaction by ‘mixing’ it with others’ bitcoins before sending equivalent amount of bitcoins back to you after taking a service charge.
Nifor Infotech defined Bitcoin mixing by saying that,
“Bitcoin mixer breaks the connection between your old and new address by sending coins from you to other people and their coins to you. Therefore, your transactions become anonymous. Bitcoin’s blockchain is a public ledger where you can see everyone’s balances.”
Why is it Necessary to Use Bitcoin Mixer?
The implementation of such services became essential in view of the fact that many original adopters of Bitcoin were attracted by the fact that it was perceived to be anonymous.
Further developments however, led to the exposure and publicity of the ledger. Even though this may not have been an issue, regulatory actions have ensured that access to funds in exchanges require KYC processes.
The fact that blockchain or the Bitcoin ledger is an open one, accessible to anyone that cares to look at it means that people can spy on you and know exactly how much bitcoin you have, and how you spend it.
This means that users of Bitcoin can be identified through linking their identities to their wallets. This effectively blows the cover off anyone that intends to remain anonymous while using Bitcoin.
Now it is easy to assume that such persons may have acquired their coins illegally, but this is not always the case. There are many users who want the source of their coins untraceable for security reasons.
In essence, the service mixes (exchanges) your bitcoins with others’, so that they cannot be traced back to you.
There is practically a good reason for this. People do not usually expose their bank accounts to strangers and the public. There is hence no reason to keep your bitcoins in public view. This is especially necessary if you have a large sum in your Bitcoin wallet.
How to Use A Bitcoin Mixer
The first step in bitcoin mixing or tumbling is to find a reliable mixer, keeping in view of the fact that there are many fraudulent third party services in the cryptocurrency industry. This is mainly why you must conduct due diligence before sending your bitcoins for mixing to any of these service providers. First ensure there are enough positive reviews on the service.
The good ones and sometimes the scams do not require any form of signing up.
There should be a wallet address on the site which is the mixing service address. This is where you send the coins you want mixed.
There should also be a provision for inputting your receiving address. This is where you want your bitcoins sent after mixing.
There may also be a provision for custom time delay. This is necessary to throw off blockchain analysis. Some mixers require minimum of 30 minutes.
So input your receiving address, send the coins and wait for them to be mixed and sent to your new wallet address.
With this process, your bitcoins would have been successfully tumbled and mixed for anonymity and security purposes.