Bitcoin mixer

Bitcoin mixer is software (or a service like CoinJoin) that accepts Bitcoin from multiple users, mixes them so you can’t identify who sent how much, and then sends out different bitcoins to their destinations.

If you were to view such a transaction on an explorer, you’d find the address of the mixer as the recipient (in the case of an outgoing transaction from your wallet) instead of a Bitcoin address. Similarly, if you typed in a transaction recipient’s address, and looked to see where the coins came from, all you’d find would be the tumbler’s address.

It’s called a “mixer” because it mixes your coins with other holders' coins to the point that none of them can be connected back to their original wallet addresses.

Hence, when you use this solution, you can send Bitcoin or receive it while remaining completely anonymous.

Most Bitcoin tumblers require you to pay service fees for mixing your coins, which are subtracted from your deposit.

Comparison to CoinJoins

A CoinJoin collects the inputs of many users, and broadcasts them into many outputs in a single transaction, whereas a mixer sends your bitcoins through a series of transactions with a variable number of inputs and outputs, before it is sent back to you in another address, or imported into a wallet as a private key.

A mixer additionally uses a wide variety of techniques to enhance authenticity and privacy, including onion links, PGP signatures, and letters of guarantee.

While a single CoinJoin transaction does not provide as much anonymity as a mixer, a wallet coordinator which relays funds through a series of CoinJoins may have a comparable level of anonymity as a mixer.

Anonimity

While the underlying cryptography and algorithms used by mixers are usually robust, they can be undermined if a mixer records logs of its user activity. This can be used to de-anonymize users in the event that this data is stolen during a hack or collected by law enforcement during a site take-down.

A mixer's privacy may also be undermined by its hosting provider, its domain name service (DNS) provider, telemetry data sent to analytics services, and any DDoS protection services used by the website, such as Cloudflare.

Controversy

Because of the level of anonymity provided by mixers and the nature of how these services operate, they are frequently used by criminals for money laundering. While Bitcoin mixers are not necessarily created with the intent of laundering money, hackers have used them to anonymize large sums of crypto (in some cases worth hundreds of millions of dollars) that have been stolen from exchanges, bridges, and DeFi services during hacks. This has led to an increased scrutiny of bitcoin mixers by various governments, and have in some cases resulted in bitcoin mixers getting seized.

In particular, bitcoin mixers are often abused by state-sponsored cybercrime groups such as Lazarus Group, which in at least two occasions caused the United States to place the used mixers on the OFAC sanctions list. This is despite the fact that many bitcoin mixers forbidding their use for crime in their terms of services.

Critics of bitcoin mixers say that the addresses belonging to mixers can easily be identified, that exchanges are more likely to withhold a user's funds if they deposit or withdraw to a mixer, that there are a large number of counterfeit websites impersonating mixers, and that users could lose their bitcoins if a mixer is seized by law enforcement before the mixing process is complete.

The Bitcoin forum bitcointalk.org has forbidden the act of directing people to bitcoin mixers on its website, effective January 1, 2024.

See Also

• Anonymity