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In the Bitcoin network, your transactions remain anonymous — but it's possible to trace them. If someone finds out that a specific BTC wallet belongs to you, they will be able to monitor your incoming and outgoing financial operations. This raises concern among those users who would love their crypto payments to be as confidential as possible. To fix the issue, BTC mixers were invented. Such services are also known as BTC tumblers.

==What Is a BTC Mixer?==

A Bitcoin mixer is a service that operates on the following principle:

You send BTC to it
Your funds get mixed with what other people send
The mixer releases your funds so that you can use them as you wish

After the mixing, it's impossible to trace where the coins came from. If a third party opens the history of transactions in your BTC wallet, they will see that you sent funds to the mixer. But they will never get to know how you used your coins after they were mixed. Let's imagine that you spend this money in an online shop. If someone scrutinizes the history of purchases in that store, they would fail to discover that you used its services. They will only see that a certain transaction came from the mixer.

To access a BTC tumbler, you should use either the Tor browser or a proxy server. You'll be required to register in the mixer to be able to launch it. Some services feature a minimum threshold for the transaction while others don't. The lower the sum that needs to be mixed and the fewer confirmations the service has to make, the quicker you'll get your money.

The more people use a certain mixer, the more difficult it becomes to trace the financial operations conducted through this service. To enhance privacy, consider these measures:

Splitting the deposit into several parts
Withdrawing funds into several parts, sending each part to a new wallet
Letting the funds stay in the mixer before the withdrawal for as long as possible

The address of the BTC wallet that the mixer will generate for you might remain available for 24 hours only.

To be able to withdraw the mixed funds, it's important to keep the unique code and the letter of guarantee that the service will issue to you before you launch it. You can either copy and paste the text of the letter or download the letter. This data will prove the fact that the mixed coins indeed belong to you. If you fail to provide the text and the code, the tumbler might refuse to release the funds after mixing them.

==Varieties of BTC Mixers==

Some mixers are free to use. Others will charge you a fee. The amount of the fee normally falls within the range of 0.25% to 3%.

Besides, mixers can be classified in the following ways:

Custodial vs non-custodial
Centralized vs decentralized
Obfuscation-based vs zero-knowledge-based

The custodial type suggests that you should transfer your savings to a trusted third party. During the process of mixing you lose ownership over your funds for a short time. Then, the money will be returned to you. If you rely on the services of a random unknown mixer, there is always the risk that your funds might get stolen.

Non-custodial mixers feature publicly verifiable and transparent smart contracts. No third party gets involved in the process. Here is how the system works:

Deposit your funds through the address A
Wait a bit
Withdraw the mixed coins through the new address B

Before releasing the funds, the service will ask you to prove that it was you indeed who deposited them. To do so, you can employ ring signatures and zk-SNARKs in the withdrawal transaction. You won't need to expose the deposit transaction.

Centralized mixers operate on a simpler principle, compared to their decentralized counterparts. They are companies that offer this service in exchange for a fee.

Decentralized tumblers employ protocols to disguise the origin of the funds. They function on a peer-to-peer (P2P) basis. A large group of individuals throws their Bitcoins inside the pool to redistribute them.

Obfuscation-based mixers are alternatively dubbed "decoy-based". They conceal your transaction graph — however, tech-savvy professionals might be able to restore it anyway if they're ready to invest enough effort in it.

Zero-knowledge-based services completely erase the transaction graph with the help of advanced cryptographic techniques.

==Are Bitcoin Mixers Legal?==

The answer to this question depends on two factors:

The legislation of the territory where you live
How you spend the mixed money

For instance, in the US, crypto mixers are classified as money transmitters by the Financial Crimes Enforcement Network. Their owners must register them with this body and get a license. In 2021, an Ohio resident was arrested for offering BTC mixing services on the darknet — he was accused of contributing to money laundering.

Around 25% of all incoming illicit Bitcoin is processed through tumblers. The two other popular methods for laundering dirty crypto are cryptocurrency exchanges and gambling websites.

To play safe, some crypto exchanges don't support transactions with mixed coins. As soon as they identify a transaction to or from the address of a mixer, they label these funds as tainted.

Imagine what can happen when law enforcement authorities decide to investigate a dirty business whose representatives use a specific BTC mixer. They will scrutinize all the financial transactions that are related to that mixer. They will come across your wallet's address as well. If you don't do anything illegal, you don't need to worry about it. But if you do, there are chances of attracting the attention of the police.

==Alternative to Mixers==

Instead of using a BTC, you can resort to alternative ways of disguising your transactions history:

Use the services of an online store or a platform that features an in-built mixer
Switch from Bitcoin to Monero, Dash, Zcash or other coins that provide enhanced anonymity guarantees
Create a chain-hopping network

Chain-hopping is usually used for malicious activities. Criminals who rely on it create accounts on multiple crypto exchanges with the help of stolen or cheaply bought identities. Once an account passes the KYC verification, it's considered reliable. Criminals begin to send money from one trading platform to another so it becomes challenging to trace its origin. We don't actually recommend anyone doing so — but we'd like to inform you about this technique.

==Final Thoughts==

BTC mixers are services that enhance the privacy of your Bitcoin transactions. They can be centralized or decentralized, custodial or non-custodial, obfuscation-based or zero-knowledge-based. You might need to pay a fee for using a mixer.