And if you can prove to me that someone can connect my identity to all of my addresses than i'll say i'm wrong and i have misunderstood what privacy is .
Great. So listen how easy it is. You purchase some coins, likely from a KYC-ed exchange? Say Binance. You immediately withdraw to your non-custodial wallet. Binance now knows one of your addresses. Binance, and every single exchange like it, share this kind of information with chain analysis companies, like Chainalysis, Elliptic, CipherTrace, Merkle Science etc., and with every other entity that demands it.
Let's say now that you do this little "trick" of dividing your amount to several addresses, 5 for the sake of simplicity, trying to obfuscate the destination of your withdrawal funds. Now Binance and every entity they share information with, know that you either split your funds to 5 places, or that you paid 5 people, or a combination of those two. At some point in the future, you'll spend those 5 outputs. Let me choose some merchants for you:
- UTXO 0: A domain name provider, who uses BitPay.
- UTXO 1: Coinsbee, to buy a month of Spotify premium.
- UTXO 2: Amazon gift card, from Bitrefill.
- UTXO 3: You want to sell this one for fiat, you use Kraken.
- UTXO 4: A local place at your town that accepts bitcoin.
- BitPay, if you don't know it, has implemented KYC and AML requirements, so it does involve blockchain analysis in some level. Just a phone call, and UTXO 0 is de-anonymized.
- Coinsbee. That does not interact with chain analysis companies, but it's trivial from a blockchain perspective to know which outputs are Coinsbee's. So UTXO 1 can later on be de-anonymized in some sort (that it was sent to Coinsbee, from unknown yet sender).
- Bitrefill. Same as with Coinsbee.
- Kraken. Fully KYC-ed, interacts with companies that trace the chain, you send the money there, you de-anonymize that output.
- Local place. If we assume they don't use an intermediary, then it can provide decent level of privacy, but once it reports anything, it can reveal that UTXO 4 has been sent to a merchant near UTXO 3's owner, which is essentially all UTXO's owner, because they're also linked with Binance, to whom you've given the same name as with Kraken.
And that's before we even mention that centralized exchanges get breached all the time, all that info is ending up to the dark web, or that you rarely spend the entire output, so you frequently have some change outputs that you can't merge together, because you'll reveal you were the owner of their parent outputs-- until you do, because... change outputs are meant to be merged for the same reason you don't spend an entire output.
What a chain analysis company can see is coins moving between addresses
Except that they rarely rely on that. They have so much information given by centralized exchanges, that whatever you do, you're likely at some list waiting to be de-anonymized. The transparency of the chain is not as useful per se.
By using a mixer all you accomplish is to take away from yourself the privilege of proving that your transactions are legitimate
Why isn't "I used a mixer" an acceptable response?
You see kids taking out their whole lives on social media and on the other crying about being watched by the "Big Brother" .
You know there's a difference between knowing what dog videos I like watching and how much money I have.