ADSactly Crypto: What Are Coin Mixers?
What Are Coin Mixers?
Your right to financial privacy has never been more under threat we move into a cashless society. Cash gave us rights we took for granted, the ability to pay who we want for what we want without anyone getting involved. Now with the financial system moving into credit cards, debit cards, online payments and bank deposits, we providing central authorities with a wealth of data on our spending habits and have no control over what they see.
We are an open book, Bitcoin and other cryptocurrencies that have no privacy features are pseudo-anonymous since we cannot tell who the person is but we can see their wallet and the transactions being made by that wallet, how much they are, how frequent they are and the wallets they are sending it to, the history is all on the blockchain.
Anyone can access this history and with scripting tools and some background on the person, you are trying to track you can find out a fair bit about them. This is why some currencies like ZCash, Verge and Monero have focused on the privacy space.
Image source: - coinsutra.com
Mixing it up
Bitcoin and currencies other like Litecoin that do not have privacy options may be an open book but that doesn't mean you cannot add an additional layer of privacy to your transactions. Taking advantage of coin mixers is a great way to use your favourite coin, not lose value through and add additional admin by changing to privacy coins and still pay those you would like the values they would want.
What is a coin mixer?
Coin mixers are a 3rd party tool that takes your cryptocurrency transaction and mixes it with a giant pile of another cryptocurrency, and then sending you smaller units of cryptocurrency to an address of your choosing and covers the tracks of your transaction.
Coin Mixers generally charge between 1-3 % to mix a transaction and that's how these companies make money. The majority of coin mixers are centralised services but there are solutions where users don’t need to trust anyone. Possible decentralised solutions for coin mixing include
- A Lightning Network-style payment channels side chain
- Combining privacy coins in the mixing process
There is no outright winner in the mixing race so we will have to wait and see which option turns out to be the best solution.
How do coin mixers work?
These transaction tumbling services use of an algorithm that allows the service to obscure the history of the tokens they receive.
Users send their coins to mixer receives the coins, then it jumbled them up with a pile of transactions and sends it to a large number of addresses in small amounts. It is this process that gives the services their name as they are ‘mixing’
These jumbling of transactions make it is near impossible to determine the true history of a coin. In some cases depending on the mixer, to further obscure the history of the coin, the mixer may repeat the process a several times.
Once the process is completed, the tumbling service will send the ‘clean’ coins to an address specified by each owner of the original transaction.
Image source: - Worldcryptoindex.com
Get in the mix
Have you used a coin mixer before? Would you consider using one? What do you think of coin mixers?
Written by @chekohler
Sources
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In fact, I have not heard before about this important matter that we are in a critical stage and it is necessary to limit the paper currencies. Everything should be encrypted. The dependence on Bitcoin in the means of payment between countries and among all people is only a matter of time. I hope the developers will develop more networks. Thank you.
I think it shows the need for multiple solutions to be added to the bitcoin network as cool as alt coins are BTC will always be the main way to trade in this space!
I think once lightning network is fully running solutions like mixing can be done from wallet interfaces and a the user won’t need to know much about it all they would do is select private transaction pay the fee and be done
One of the advantages that I could see from the beginning with the crypto currencies was precisely the apparent transparency of the transactions. I had no idea these mechanisms existed to camouflage the operations. Every day you learn something new. Thank you very much for reporting, @chekohler
Well when people need something the market tends to provide it, it started as a manual service but due to its popularity it’s starting to grow and I can’t see it stopping it’s also important to protect the fungibility of a currency let’s say we want to donate to a journalist or project the government doesn’t like, they will find it hard to stop transactions or seize bitcoin and blame it on an illegal use
When I learned about the world of the block chain, and entered it through Steemit, I found the transparency of the transactions and the status of the wallet to be an optimal feature. Then, with the serious threats of cybernetic intervention, I thought about the dangers that this transparency could mean (it is not my case, because it would not be a monetarily attractive piece for anyone). I find this mechanism very interesting, although I think it is a bit complicated. I wish it could be simplified over time. Thanks and greetings, @chekohler.
Yes I agree the majority of transactions don’t need it, and if you’re open to making public transfers by all means but or doesn’t meant everyone feels this way some people want their privacy
People should be allowed this extra level of security! It’s complicated for sure but I think in future like I mentioned in the post it could become a second layer feature and built into wallets
https://www.mixbtc.io/
Mixbtc.io was created for the bitcoin mixer community with three things in mind, trust, speed, and security.
We understand that using a bitcoin mixer for the first time can be uncomfortable so we recommend splitting larger transactions into multiple ones until you’re comfortable with the process.
The time that a mix takes to complete is usually down to the network fee that is selected, choose a high network fee to get your transaction confirmed sooner and the mix initiated quicker.