In this Guide on Bitcoin mixers we want to help you learn the basics of mixing so that you can easily use any tumbler out there. A "Mixing” process means that some coins are sent into the mixer, cleaned and returned back to the user’s receiving address.
You might have heard that mixers (and Bitcoins) are used exclusively by criminals and hackers. It's the same as saying that the USD is used only by criminals. Yes, a small portion of both is used for illegal purposes. But, the majority of operations in both Bitcoin and USD are performed for completely legitimate purposes. People are starting to use Bitcoins as a store of value and a method of payment on the multitude of sites.
Let's go over all the major questions people ask about Bitcoin mixers without any stone unturned.
#1 Anonymity vs pseudonymity
Bitcoin isn't anonymous. It's pseudonymous.
This means that you can create the wallets and use them to transact on the blockchain. You won't have to associate the wallet with your identity. In this way, wallets are completely anonymous.
However, the minute you decide to withdraw the amount stored in the wallet to your exchange account which is associated with your identity, the whole track record of your operations on the blockchain gets into the public domain and anybody can easily access your financial information.
Even more scary, all your future transactions will be open to the public too.
In comparison, cash is much more anonymous. And, of course, nobody has access to your financial data stored with the bank.
Except maybe for bank staff who operate with stringent limitations.
However, even though Bitcoin is not completely anonymous, there's a way to claw back your confidentiality.
#2 How mixers work
As we've said, Bitcoin is not completely anonymous. Mixers help.
Here is how mixers operate:
1. Customer send the "dirty" coins to the mixer
2. The mixer takes the coins from all the customers who have been sending the coins within the last couple of hours and places them together. At this point, your dirty coins are in full control of the mixer. Mixers implement some algorithms and might also do manual operations on top of them.
Some mixers receive coins from you and then send out the coins they received from other users before. Others say that they source Bitcoins from crypto exchanges or their own reserves.
3. The mixer returns the "cleaned" coins to the receiving address.
Several types of mixers can be identified depending on how they process the coins you send to them.
#3 What types of mixers exist
Such mixers are controlled by a centralised team. It takes full control of your Bitcoins.
Wasabi and Samourai wallets have the embedded decentralised mixers. There's no single point of failure.
The problem here is that you register at the wallet and thus leave a pretty big trail.
Both centralised and decentralised tumblers use various methods to source coins. Let’s talk about the sources now.
#4. Where the "clean" coins come from
1. From other users, controlled by exchanges
You send in the coins, other users do too. The mixer joins them together the way it sees fit. You get somebody else's coins.
2. From other users, controlled by users
100 users send in 0.1 BTC to the service. Then they get the same amount from the service, but they don't know whose exactly the funds are.
3. From exchanges
You send the coins to the mixer. The mixer sources the coins from the exchanges and sends them back to you.
To deposit coins to the exchange, the other users need to undergo strict KYC and AML which proves that the coins have been cleaned with the high strength of mixing before.
Thus, coins sourced from exchanges are always deemed as of higher quality as compared to those that come from other Bitcoin users.
4. From mixer reserves
The tumbler leverages its own reserves to send the coins back to you. In the majority of cases, the reserves are made up from the payments previously made by the users like yourself. That's why, it's fair to say that this type of sourcing is identified as Type 1 described above. However, it’s possible that the investors provide the mixer with coins that come from individual holders and exchanges.
Now that you know how mixers operate and where they source coins from, it’s time to learn how to compare them and pick the ones that meet your needs most.
#5 How to compare mixers: fees and mixing strength
You can compare the Bitcoin tumblers by fees you pay or the strength of mixing you enjoy. The strength means the quality of the coins you receive and the effectiveness of the obfuscation (concealment, cloaking) methods the service enables.
The fees are fees. And the strength of mixing is built up the number of parameters. Here’s the list of this parameters and we’ll talk about each of them below.
Number of receiving wallets
Percentage distribution control
Number of transactions
Letter of Guarantee
Now let's talk about each of these features one by one.
#6 Feature 1: TOR website
You can access most of the mixers via the TOR website which is believed to provide a higher deal of confidentiality and anonymity to your operations.
When using TOR websites, JS is not functional which prevents developers from implementing user-friendly UI and most of the interfaces look outdated. This is the trade-off you have to pay if you wish to access sites via the ultra-secure TOR technology without any JS-enabled components.
TOR goes hand in hand with the no-logs policy described below.
#7 Feature 2: No-logs policy
This means that the mixer doesn't retain any logs or other information about their users. Choose the TOR version of the mixer site for higher confidentiality.
Naturally, most mixers don't enable any registrations and personal accounts which would smooth out the repeated use.
But some mixers offer a "hash code" that saves the settings you have used at the tumbler before without associating them with any personal identifiable information. This helps whenever you want to re-use the same set-up multiple times.
#8 Feature 3: Number of receiving wallets
Whenever you adjust the settings at the mixer, you need to choose the number of receiving addresses. These are addresses where the mixer is supposed to send the cleaned coins.
Some mixers enable you to use only a couple, while others offer dozens. In comparison, ChipMixer provides the unlimited number.
For better protection against the blockchain analysis, use more than one receiving address. But go overboard. 3 to 5 are probably the best.
#9 Feature 4: Delay control
Most the services enable you to delay the time when the output transaction will send out to your receiving address.
It makes sense to delay this event by no less than 2 hours so that the input and output transactions aren't added to the same block.
#10 Feature 5: Percentage distribution control
If you choose more than one receiving address, you'll have to determine the percentage shares for each of the wallets.
Some systems will break down the amounts in equal portions. Make sure that you never leave this function unchanged because it'll be easy for the analyst to pinpoint the equally sized transactions on the blockchain.
Try to split the amount into pretty unequal portions. For instance, if you want to send out to 3 wallets, set up the values to 34%, 53% and 13%. The more unequal the percentage distribution for your Bitcoins is, the better.
#11 Feature 6: Fees control
Some services allow you to pick a specific value for the fees within the range they apply. This is another great tool to randomize your transactions and add unpredictability. Should you apply the 5% to your transactions continuously, it enables the blockchain analyst to easily trace your transactions.
Mixers like BitMix use the fee grades in order to furnish the coins of different quality levels. The more you pay, the better Bitcoin you'll receive in return.
The quality of Bitcoins you receive depends on their source of origin. The cryptocurrency exchanges provide the highest-quality coins since the exchange users need to first undergo the rigorous KYC and AML procedures before they can deposit the amount. The lowest quality is when you receive the coins from users like yourself, i.e. when there’s no information as to the coins providence.
#12 Feature 7: Number of transactions
With a few services like BitMix you can request that the payouts are made via a number of transactions.
Naturally, this is a much better option as compared to receiving only one transaction to your receiving address for the full amount of the payout. This adds another good level of unpredictability to your transactions.
#13 Feature 8: Letter of Guarantee
Since almost all mixers are completely anonymous and there are no logs about your activities on their sites, the Letter of Guarantee serves as the only proof that you did actually send the coins to the service.
It's a txt-format document that is usually provided by the service after you’ve adjusted the settings. If something goes wrong during the process, the customer support team will request that you produce this document to them. And it's quite possible that they will refuse to assist with your queries without it.
In addition, the Letter of Guaranteed usually contains the confirmation as to the fact that the mixer actually owns the wallet address you've been provided with. In this way, it's used as a protection measure against any phishing and other hacking attacks.
Now that you know the basics on the mixers, let's dig a bit deeper. And if you don’t need that, proceed to the comparison of the best mixers we've tested and reviewed.
#14 Feature 9: Mixing Code
A mixing code is a special code which you can use in order to avoid receiving your own coins from the tumbler.
Even if the tumbler is very popular and has good reserves, there's always a chance that some of the payout coins might be yours.
To prevent this from happening, all you need to do is save the mixing code after doing the first mixing run at the service. Input it before the new gig and save the new mixing code after you've completed the new run.
In this way, the mixing code will contain the information about the "chain of mixing runs" at the tumbler and you'll never receive back any of your coins.
#15 Blockchain analysis
The blockchain analysis is used to track and analyze the transactions on the blockchain. The blockchain analysts can uncover both illegal operations and transactions by ordinary users like yourself.
In order to assure confidentiality and protect against the blockchain analysis attacks, you can employ the Bitcoin mixers. Otherwise, there's always a high risk that all your past - and future - financial operations will be uncovered and get into the public domains, ready to be analyzed by anybody with access to the Bitcoin blockchain.
#16 KYC and AML procedures at cryptocurrency exchanges
AML stands for "Anti-Money Laundering", and KYC for "Know Your Customer".
AML is a suite of policies that the "legacy" banks and other financial institutions have been using for decades. KYC is a component of the overall AML vision.
And now the relevant laws are being gradually developed that would impose the same AML KYC requirements on all crypto-related stakeholders. We are seeing the creation of the universe of novel services here, including exchanges, non-custodial wallets, ATMs, mixers, dApps that sell coins, ICO issuers, mining pool operators, custodial wallets, and crypto payment processors. All of these players will gradually require users to undergo the KYC/AML procedures.
This move towards implementation of the AML/KYC rules is beneficial because it will enable a faster adoption of the new crypto assets by wider swaths of users. While early adopters and enthusiasts might thrive in spite of high risk and uncertainties currently seen in the crypto industry, the ordinary users yearn for stability and transparency.
Thus, whenever you decide to deposit into an exchange some of the Bitcoins you already own, it might make sense to first clean the coins via the mixer. The idea here is that you don't really know the exact "supply chain" for the coins you own, and it's much easier to exchange with the "clean-slate" coins from a mixer.
Mempool is a list of transactions that are currently prepared for the inclusion into the next block on the blockchain.
Some mixers say that they ensure that your transactions are included into the right “section” of the mempool since different sections include payments within specific ranges. For instance, one section might house smaller payments for no more than 0.1 BTC and another will keep the bigger payments for 1-10 BTC.