Cryptocurrencies, and especially bitcoin, are supposedly completely anonymous. At least that was the idea behind their creation. However, this is usually not the case for most of them. So, if you are trading or transacting using bitcoin with the notion that you are anonymous and cannot be traced, then you are deceiving yourself. Bitcoin’s blockchain is in the public domain and anyone can download the code and see all the addresses that have transacted. They can then trace back a particular address to its wallet and hence to your account. Since your account will most certainly contain your details like an email, identity card, and name, a savvy user can identify you with ease.
So, is there a way of being completely anonymous? Yes, you can use bitcoin tumbler to anonymize your coins if you wish not to have people tracing the source of your coins back to you.
What is a Bitcoin Tumbler?
In essence, a cryptocurrency tumbler as it is also known is an online service that helps you obscure the origin of your coins. It is a software that you can access online or rather remotely, and have it cut the link between you, that is your address, and the address of the person you wish to send the coins to, or the person who sent you the coins.
How Does it Work?
If for instance, you send some bitcoins to person A, then that person sends those coins to another person B, then that person resends the same coins to person A, the bitcoin blockchain will show all the addresses involved in that transaction. A person who is conversant with blockchain technology can identify the connection existing among the three persons.
The cryptocurrency tumbler works in two ways. The first is shuffling your coins with others making it difficult to identify their source. Once you send the coins to the tumbler, it mixes those coins and other transactions, then sends them randomly to different wallets. That means that you can first have your coins pass through the tumbler, before having the tumbler deliver them to your intended address. This mixing makes it impossible to trace the coins back to any specific address. The tumbler will charge you a commission of the bitcoins you send for the mixing service. So, if you are sending a certain amount to another address, factor in the commission fee, since the other address will receive a sum less the commission.
The second method involves converting your bitcoins to a completely anonymous cryptocurrency like Monero. Since Monero is completely untraceable, you cannot link the bitcoins with their source or the address to which they will be sent. The tumbler then converts the Monero back to bitcoins, and can either send them back to your address, or the address you intend to send them to.
What Info Do You Provide?
When using a crypto tumbler, you do not provide any personal or identifiable details. You do not require to have an email address, no registration is required, there is no know your customer (KYC) process and no logs. All you need is the bitcoin addresses that you will be sending your “clean” coins. Your addresses are also not logged into the system, so no one can trace any coins to any address.
Is Tumbler Safe?
The safety of the tumbler is a contentious issue. One thing that you need to know is that those providing this service do not discriminate between “dirty” and “clean” coins. They accept coins from anyone and any address. Your coins will be mixing with those of traffickers and saints alike. If security agents were to raid such a service, you would lose your bitcoins. Of late, two main cryptocurrency mixers have suffered this fate. Bestmixer and Bitcoin Blender were both closed with users’ bitcoins. The latter allowed users to withdraw some coins over a short period then shut down with the rest. So, generally, these mixers are not as safe as they do not meet the standards of operational security, and use poor encryption. They also have ailing infrastructures and can shut down at any time.
Do You Need Them?
That depends on whether you need anonymity. If you have coins that you wish to obscure their source completely, then you might consider giving the mixers a try, but you will be risking. If you have no problem with your transactions remaining on the public blockchain, then you do not have to risk your coins. You can use anonymous addresses that don’t lead to your accounts.