Why use Bitcoin mixers?

[BitcoinTay]

I'm not very knowledgeable when it comes to Bitcoin mixers, I believe the general idea of using a mixer is to maintain anonymity and privacy.
The way I  understand how mixers work is they mix the Bitcoin through different addresses so the inputs and outputs won't match. Electrum wallet has a number of unused addresses that one can use. Would I achieve the same result if I were to move the bitcoins through these addresses on my Electrum wallet as opposed to using a mixer?

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[NeuroticFish]

Would I achieve the same result if I were to move the bitcoins through these addresses on my Electrum wallet as opposed to using a mixer?

Normally a mixer breaks the link between the inputs and outputs. Meaning that you get back money that's not obtained from shuffling around your own coins. So normally the answer is no.

On the other hand, CoinJoin is also considered mixing. And afaik CoinJoin does not break the link, hence, if you are keen to do that in your own wallet, you may (but it requires so many operations you don't want to do that by hand).

[Junii]

When you use a Bitcoin mixer, your Bitcoin transactions are mixed with other users' transactions, making it more difficult for anyone to trace the transaction back to you. A mixer works by receiving your Bitcoin, mixing it with other users' Bitcoin, and then sending it back to you in smaller, randomized amounts through different addresses, making it difficult to track the movement of the fund,it's important to note that Bitcoin mixers have the potential to be used for illegal activities, such as money laundering or funding criminal activities. Therefore, it is important to use a reputable and trustworthy mixer service, and to ensure that the mixer does not keep any logs or records of transactions.

[TracaChang]

Bitcoin mixers have the potential to be used for illegal activities, such as money laundering or funding criminal activities. Therefore, it is important to use a reputable and trustworthy mixer service, and to ensure that the mixer does not keep any logs or records of transactions.

Come on... just saying it increases privacy or fungibility would be enough, money laundering and funding criminal activities are mostly done by using fiat, so please avoid this gouv propaganda 

About logs I do agree, and if you are concerned about this, using a non custodial coinjoin solution would be better than using a bitcoin mixer.

[Myleschetty]

Electrum wallet is not a privacy wallet and the unused addresses you see on the electrum wallet can be linked to the wallet owner. Besides, there's a way of getting the IP address of the wallet owner through an electrum wallet and this is the reason why people make use of a Bitcoin mixer or privacy wallet when anonymity is important.

[joniboini]

it's important to note that Bitcoin mixers have the potential to be used for illegal activities, such as money laundering or funding criminal activities. Therefore, it is important to use a reputable and trustworthy mixer service, and to ensure that the mixer does not keep any logs or records of transactions.

From the way you write this, it sounds like you suggest anyone who uses a mixer would make illegal transactions. The answer is no, afaik even the US government said a mixer as a tool to improve your privacy is not breaking any law as long as you don't use it for illegal purposes. They even have legal guidance for it1]. CMIIW.

That being said, I do agree that it is important to use a 'trustworthy' service, but it is difficult to verify if they really collect no data, or just keep their logs in many servers. Reading reviews before using them or using other means to improve your privacy is a good idea before you start using a new mixer service.

[1] https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf

[suzanne5223]

it's important to note that Bitcoin mixers have the potential to be used for illegal activities, such as money laundering or funding criminal activities. Therefore, it is important to use a reputable and trustworthy mixer service, and to ensure that the mixer does not keep any logs or records of transactions.

From the way you write this, it sounds like you suggest anyone who uses a mixer would make illegal transactions. The answer is no, afaik even the US government said a mixer as a tool to improve your privacy is not breaking any law as long as you don't use it for illegal purposes. They even have legal guidance for it1]. CMIIW.

That being said, I do agree that it is important to use a 'trustworthy' service, but it is difficult to verify if they really collect no data, or just keep their logs in many servers. Reading reviews before using them or using other means to improve your privacy is a good idea before you start using a new mixer service.

[1] https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf

If you don't provide the link to the pdf file I won't believe the statement but what I don't understand is that if the FinCEN said "An anonymizing services provider is a money transmitter under FinCEN regulations" then why did the Europool, Federal Bureau of Investigation, etc seized or shutdown some crypto tumbler site since they fully understand the purpose of their service right from beginning?

[rat03gopoh]

Electrum wallet has a number of unused addresses that one can use. Would I achieve the same result if I were to move the bitcoins through these addresses on my Electrum wallet as opposed to using a mixer?

The electrum wallet doesn't have "unused" addresses, if it does it was none other than previously generated/imported by you. So, to achieve the goal as mixers do, it will be nowhere near the same result. In the way you propose, i think you better take advantage of the (Non-Kyced)exchange's hot wallet.

[BitcoinTay]

Normally a mixer breaks the link between the inputs and outputs. Meaning that you get back money that's not obtained from shuffling around your own coins. So normally the answer is no.

On the other hand, CoinJoin is also considered mixing. And afaik CoinJoin does not break the link, hence, if you are keen to do that in your own wallet, you may (but it requires so many operations you don't want to do that by hand).

Thanks I think I understand better now from your explanation. I noticed some mixers also use CoinJoin and others do not. Is CoinJoin a criteria to determine which is the best mixer to use?

The electrum wallet doesn't have "unused" addresses, if it does it was none other than previously generated/imported by you.

I don't think I used the term wrong, I got the term "unused address" from Electrum. The wallet has about 20 receiving addresses you can use, that's what I mean.

Electrum wallet is not a privacy wallet and the unused addresses you see on the electrum wallet can be linked to the wallet owner. Besides, there's a way of getting the IP address of the wallet owner through an electrum wallet and this is the reason why people make use of a Bitcoin mixer or privacy wallet when anonymity is important.

Is there such thing as a privacy wallet? If there is, please list some of those. I would like to hear what others think of this. Also how's it possible to get the IP address of the wallet owner?

[m2017]

I'm not very knowledgeable when it comes to Bitcoin mixers, I believe the general idea of using a mixer is to maintain anonymity and privacy.
The way I  understand how mixers work is they mix the Bitcoin through different addresses so the inputs and outputs won't match. Electrum wallet has a number of unused addresses that one can use. Would I achieve the same result if I were to move the bitcoins through these addresses on my Electrum wallet as opposed to using a mixer?

If it were possible to achieve this result, mixing services would never appear. Users had a need to maintain the confidentiality of information about their transactions, which mixers successfully began to satisfy.

Electrum performs only basic functions and can't provide anonymity. If your privacy is dear to you, then using mixers is indispensable.

[tranthidung]

I'm not very knowledgeable when it comes to Bitcoin mixers, I believe the general idea of using a mixer is to maintain anonymity and privacy.

It is the main idea behind Coinjoin transactions and mixing process. However, people have different reasons and different ways to use mixers, legal or illegal just similar to how they use cash for legal cash flows and for money laundering.

The way I  understand how mixers work is they mix the Bitcoin through different addresses so the inputs and outputs won't match.

You can use change address and your input, output won't match each other but people can know those addresses belong to a same wallet or same owner. WalletExplorer can help you understand it.

Privacy o-meter for Bitcoin transactions is a tool for you to check transactions of other. You can pick a random transaction in block explorer and check its privacy score. If you want to check your transactions, you have to careful and must use Tor to check it. If not, you will leak your IP address.

Electrum wallet has a number of unused addresses that one can use. Would I achieve the same result if I were to move the bitcoins through these addresses on my Electrum wallet as opposed to using a mixer?

You can not achieve it with Electrum wallet because a mixing process is more complex than using change address. Electrum wallet does not support Coinjoin transactions and you can not set your anonymity set.

[Maslate]

If you want a more detailed explanation, you can also check out some videos on YouTube. Simply search for the terms 'bitcoin mixer' and 'bitcoin tumbler.'

Bitcoin is often used for anonymity, but since the introduction of KYC requirements, it has become less anonymous. That's why bitcoin mixers exist nowadays. Some people may view it as a negative development, as these mixers can be used for criminal activities, especially for money laundering. However, as long as you can justify your actions and they are legal, it's okay to use these services.

[Myleschetty]

Electrum wallet is not a privacy wallet and the unused addresses you see on the electrum wallet can be linked to the wallet owner. Besides, there's a way of getting the IP address of the wallet owner through an electrum wallet and this is the reason why people make use of a Bitcoin mixer or privacy wallet when anonymity is important.

Is there such thing as a privacy wallet? If there is, please list some of those. I would like to hear what others think of this. Also how's it possible to get the IP address of the wallet owner?

Yes, there is plenty of Bitcoin privacy wallet. I don't know how to explain the technology of it but the sender's IP address can be detected in the electrum wallet and that's people are advised to make use of VPN, etc when using it. Here is the list of Bitcoin privacy wallet I know but I am sure there still more
Wasabi wallet
sparrow wallet
Samourai Wallet
unstoppable.money

[TracaChang]

Is there such thing as a privacy wallet? If there is, please list some of those. I would like to hear what others think of this.

Joinmarket

Also how's it possible to get the IP address of the wallet owner?

Because if you are not using your own node, you are connecting to someone else node and in order to establish connection they must see your IP. Using tor can help but if you don't use your own server in case of electrum, you are sending all the addresses the connected servers to check balances so even if they do not know your IP they can know all your addresses.

[coupable]

I've read the comments and I think they answered Op's question about the reasons for using the mixer. I want to comment on the point "Are there alternatives to mixers?"
Currently, there are no effective alternatives able to compensate for the role of the mixer in maintaining privacy on the blockchain. However, the matter is not without danger, since the service is provided by central parties or wallets, and its use requires a certain degree of technical know-how.

Yes, there is plenty of Bitcoin privacy wallet. I don't know how to explain the technology of it but the sender's IP address can be detected in the electrum wallet and that's people are advised to make use of VPN, etc when using it. Here is the list of Bitcoin privacy wallet I know but I am sure there still more
Wasabi wallet
sparrow wallet
Samourai Wallet
unstoppable.money

Honestly, this is the first time that I know that Electrum does not provide enough privacy and that it is possible to trace the IP address through its use. In addition to the large number of users of mobile and desktop versions, many others use their hardware wallets with Electrum. In your opinion, what is the most private way to safely use a Hardware Wallet?

[LoyceV]

Honestly, this is the first time that I know that Electrum does not provide enough privacy and that it is possible to trace the IP address through its use. In addition to the large number of users of mobile and desktop versions, many others use their hardware wallets with Electrum. In your opinion, what is the most private way to safely use a Hardware Wallet?

Using your hardware wallet with Electrum is generally better for privacy than using it's manufacturer's software. In that case you're certain someone knows all your transactions.
If you want privacy: run Electrum through Tor. Or better: run your own Bitcoin Core node through Tor. And always use coin control to manually select which inputs to use.

[Pmalek]

Here is a simple comparison to fiat alternatives.

If I know your PayPal address, I have no idea how much money you have in your account. I don't know your connected bank account/debit card or the history of your account.
I also know nothing about your account balance if I know your IBAN number. I would have to work for PayPal or the corresponding bank to have more information about you and your money. That means that everything is private between you and your financial service providers.

But Bitcoin is a public ledger. If I know your BTC address, I can see how many coins you have. I can see when the coins were deposited into your address and from where. If you aren't careful with coin control and you reuse addresses or consolidate funds, I can find out a lot about you and your wallet. That's not something you want people to know.

A mixer breaks that link. It's like a bingo cage. Everyone puts their balls into the machine, it spins, and each participant gets a different ball. You wipe out the history of your coins and inherit someone else's. 

[m2017]

Here is a simple comparison to fiat alternatives.

If I know your PayPal address, I have no idea how much money you have in your account. I don't know your connected bank account/debit card or the history of your account.
I also know nothing about your account balance if I know your IBAN number. I would have to work for PayPal or the corresponding bank to have more information about you and your money. That means that everything is private between you and your financial service providers.

But Bitcoin is a public ledger. If I know your BTC address, I can see how many coins you have. I can see when the coins were deposited into your address and from where. If you aren't careful with coin control and you reuse addresses or consolidate funds, I can find out a lot about you and your wallet. That's not something you want people to know.

A mixer breaks that link. It's like a bingo cage. Everyone puts their balls into the machine, it spins, and each participant gets a different ball. You wipe out the history of your coins and inherit someone else's. 

I've always been curious to know. What if inheriting someone else's history creates trouble? As a result of covering the tracks in the mixer, you will get someone else's thread with a dark history that will lead to you. Even despite the fact that you are not personally involved and have nothing to do with it.

Is this even possible?

[Pmalek]

I've always been curious to know. What if inheriting someone else's history creates trouble? As a result of covering the tracks in the mixer, you will get someone else's thread with a dark history that will lead to you. Even despite the fact that you are not personally involved and have nothing to do with it.

Is this even possible?

You are talking about dirty/clean coins and taint which is not something we as bitcoiners should accept as any kind of standard. There is no such thing as dirty BTC. There is only dirty BTC from the position of the oppressors (governments and their blockchain analysis conspirators). When you issue someone a € or $ banknote, it doesn't go through an inspection for taint, nor do you need to explain the history of it. The same rules must apply to Bitcoins.

Back to your question. It's possible that you could "run into trouble" with your newly acquired coins depending on what you do with them. Certain centralized exchanges could freeze your coins if they notice a history with crypto casinos and sportsbooks. Therefore, you don't even have to be in possession of stolen coins or crypto that originates from illegal businesses. People have had coins frozen on CEXs that have come from mixers or Wasabi coinjoins. I read a discussion not so long ago where a person who bought tens of thousands of dollars worth of crypto had all of it confiscated on a CEX because he couldn't pass AML requirements and explain the origin. 

[whirlwindmoney]

You are talking about dirty/clean coins and taint which is not something we as bitcoiners should accept as any kind of standard.

While true, I think what actually matters is how you want to use the coins after mixing. If you want to send them to an exchange, then you should probably check the history before just in case. Not doing so just because of your beliefs will probably cause you trouble in the long run, it's the same as wanting to become a doctor, but then you don't study for the local university's admission test because you don't agree with the subjects.

Here is a simple comparison to fiat alternatives.

If I know your PayPal address, I have no idea how much money you have in your account. I don't know your connected bank account/debit card or the history of your account.
I also know nothing about your account balance if I know your IBAN number. I would have to work for PayPal or the corresponding bank to have more information about you and your money. That means that everything is private between you and your financial service providers.

But Bitcoin is a public ledger. If I know your BTC address, I can see how many coins you have. I can see when the coins were deposited into your address and from where. If you aren't careful with coin control and you reuse addresses or consolidate funds, I can find out a lot about you and your wallet. That's not something you want people to know.

A mixer breaks that link. It's like a bingo cage. Everyone puts their balls into the machine, it spins, and each participant gets a different ball. You wipe out the history of your coins and inherit someone else's. 

I've always been curious to know. What if inheriting someone else's history creates trouble? As a result of covering the tracks in the mixer, you will get someone else's thread with a dark history that will lead to you. Even despite the fact that you are not personally involved and have nothing to do with it.

Is this even possible?

It depends what kind of mixer you are using. If you use one that has "mixing code", then what this means is that you will get someone else's coins and automatically inherit their history. This makes it possible that you could receive coins straight from a major hack/ransom/ any other illegal activity that you don't want anything to do with.

Using Whirlwind this can't happen as we pool all funds together in a multi-sig, the same multi-sig that is also used for withdrawals. Instead of getting "someone's" coins, you get coins that could have originated from any deposit into Whirlwind, so you can't be directly linked to anything. The privacy set (amount of deposits from where your mixed coins could have originated from) will become stronger with every executed transaction, so in a very short amount of time after we get some usage we will offer by far the strongest privacy of any mixer on the market.