What Are Bitcoin Mixer and Why Do Trading Platforms Forbid Them?

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Bittime - Bitcoin transactions are simple to track, unless the sender uses a mixer to blur the connection between their crypto address and real-world identity.

One of the original attractions of cryptocurrency is the idea that using them provides anonymity for the sender or receiver, but this is a common misunderstanding within the industry.

In Reality, Bitcoin (Btc) And Many Other Cryptocurrencies Are Easily Traceable

Evidence of this came recently when on April 27, U.S. authorities arrested the mastermind of Bitcoin Fog, a darknet-based BTC mixing service. Authorities were able to catch the operator after examining ten years of blockchain data.

You don't need to be a forensic expert to understand that every transaction is linked to addresses on the blockchain and they remain there permanently. While government agencies cannot uncover the IP address or personal data from the address, these coins typically end up being used for purchases of products or services. This creates a trail that leads back to the sender and receiver.

In The Case Of Bitcoin Fog

Law enforcement was able to identify server hosting expenses paid using digital currency. Bitcoin mixing services like Bitcoin Fog allow users to mix their coins with other users, making it nearly impossible to trace the destination addresses. This obscures the connections between the inputs and output addresses, providing a higher level of privacy.

Mixing services are available in various methods, including fully centralized solutions where trust is necessary, to Coinjoin mixers, which rely on a large group of users to collaborate and act simultaneously. There's also the option of trading on decentralized exchanges (DEX) to virtually eliminate any potential tracing.

Risk of Mixers

Mixers do come with some risks. Centralized mixers present the obvious issue of a single point of failure. Even if one believes that the entity is using multisig addresses, if the service is willing to share its data or has been hacked, their users will lose their privacy.

Example of a mixing transaction. Source: TarushTech-Medium

CoinJoin addresses this issue by combining the inputs of multiple users into a single transaction. The service then takes those coins, creates a transaction, and has each participant sign before broadcasting it to the network. These transactions are then merged into one, and each user receives the original quantity in return. 

However, no one can see the origin of those coins, not even the entity that merges the transaction.

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More Participant, More Deniability

Although CoinJoin isn't completely untraceable, it provides plausible deniability, as no one can identify which entity owns each output. The more participants there are, the greater the degree of deniability. Some cryptocurrency users also need anonymity for sending tokens to their wallets, and Wasabi Wallet has long been used for its integrated CoinJoin features.

Wasabi Wallet as The Only Desktop Solution

While its structure is technically centralized, its design ensures that the operators cannot de-anonymize users or steal any funds. Currently, the Wasabi wallet is only available for desktop solutions, so as with anything in cryptocurrency, be cautious of clones!

source: Wasabi wallet

The Samourai Wallet

A similar service is offered by Samourai wallet, which also provides a Chaumian CoinJoin mixing service, called Whirlpool. To achieve complete privacy, users need to connect the Samourai wallet to their own full Bitcoin node. However, it does offer desktop and mobile versions.

Not Illegal but Rejections Are Common

Although these mixing services are not illegal in most jurisdictions, some exchanges and services might reject users associated with addresses linked to coin mixing activities.

In Conclusion

As more people recognize the importance of attaining a certain level of privacy for self-protection, companies will have fewer incentives to deny their clients the use of mixers.

How To Buy Crypto From Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Learn How to Buy Crypto on Bittime.

Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.