Many people think of bitcoin as a completely private means of transferring money, protecting the anonymity of its users. But if you’ve ever used one of the many centralised cryptocurrency exchanges that dominate the market, you’ll know that this is no longer the case. Most of these cryptocurrency exchanges require you to go through a KYC process, so they basically link all of your crypto transactions to your real identity, which is a breach of your payment privacy. In this article, we’ll discuss some of the best tactics and services to help you regain your crypto payment privacy.
How not to compromise your payment privacy
It’s easy to get caught up in the excitement of the cryptocurrency industry and believe that your transactions are private. Although bitcoin was originally designed to be used anonymously, in reality it isn’t.
Today, thanks to mandatory KYC on most cryptocurrency exchanges, it’s not too difficult to link bitcoin wallets to the identities of their owners. As a result, the privacy of users has been compromised, creating a need to improve security and privacy. This is why bitcoin mixers are useful for maintaining the secrecy of blockchain transactions.
The anonymity of crypto transactions should not be underestimated. People who want to ensure that they are in control of their financial privacy need to be on the lookout for KYC copmlying services or cryptocurrency restrictions aimed at protecting their privacy.
The best way to do this is probably to use a variety of tools, platforms or privacy-focused tactics. A bitcoin mixer is one such tool, which is why we are going to talk about it in this article.
What exactly is a bitcoin mixer?
Bitcoin is pseudonymous, not anonymous, and the history of each transaction is recorded in a ledger known as the blockchain. However, the official identity of the user is unknown unless they have linked their wallet or transaction history to KYC.
Bitcoin can offer complete privacy, just like cash, if used properly and it’s much easier to be anonymous from the start, than to try to anonymize your bitcoins later.
However, thanks to coin mixing services it is relatively easy to make any bitcoins anonymous again for a small fee.
Platforms known as “bitcoin tumblers” or “bitcoin mixers” offer anonymisation services for crypto transactions. In most cases, the primary purpose of a bitcoin mixer is to increase the anonymity of both parties when using the mixer, making it impossible to identify the source of the bitcoins.
Mixers or blenders for bitcoins are essentially the same service. The purpose of these service providers is more important in this context than the terminology. Their main goal is to provide a service that helps users and customers maintain their financial privacy when using bitcoin.
How does a bitcoin mixer work?
Bitcoin mixer creates a pool of different inputs from transaction senders and distribute them to recipients as needed. Since the recipients don’t receive exactly the same amount of bitcoins that the sender sent, the trace between the sender and the recipient is broken.
It is important to note that unless there are a lot of people involved in the bitcoin mixing process, it is still possible to determine which sender is paired with which recipient. This is because it is extremely unlikely that two senders will send roughly equal amounts of bitcoin to their recipients.
For example, because the sender of a 0.01 bitcoin transaction is associated with the address receiving 0.0095 bitcoin, blockchain analytics companies or governments monitoring the chain can determine that the transaction was sent by the same person (the miner costs 0.0005 BTC, plus the fee for the specified coin miner).
Whether the owner is the same or not, if the identity of the sender is known, the recipient of the transaction can also be linked to them. However, as more people join the coin-mixing process, it is likely to become more difficult for anyone trying to link two addresses after using a bitcoin mixer. But these are more complex details and beyond the scope of this article.
Bitcoin mixers and blenders use a variety of tools and techniques to increase privacy, such as sending transactions at different times or using the same initial amount for each sender sending through the bitcoin mixer.
In conclusion, it’s important to remember that if everything goes as expected, such a transaction should not take much longer than a typical on-chain transaction. Sometimes this can be affected by the “timing or scheduling” of coin-mixing transactions. Typically, users don’t have to wait very long for the transaction to be processed. Even if this is the case, customers should always remember that anonymity, not speed, should be the primary goal of this type of transaction.