Why use Bitcoin mixers?

[TracaChang]

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.

If any exchange or service uses a chain analysis, they will not care if you have used any coinjoin implementation or any centralized mixer service, they will treat all the same.

That being said, people should not scare or follow their narrative about "clean" or "tainted". Following this logic at the end all coins would be tainted... however I was surprised how absurd situation is becoming when I read on news "Legal Money Laundering: How A German Bank Is Cleaning Tainted", what they do is they buy "tainted" coins stolen from gouv and after doing it, by magic it becomes "legal and clean" again, and can be sold in any exchange 

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[whirlwindmoney]

If any exchange or service uses a chain analysis, they will not care if you have used any coinjoin implementation or any centralized mixer service, they will treat all the same.

Sure, the main difference is the degree to which you could be accused and that is simply because of numbers.

Imagine you use a mixer with "mixing code" that has a 150 hour maximum delay, and before your output transaction/s during those 150 hours illicit funds get deposited into the platform. If anyone cares enough to track down the funds, your mixed bitcoins could have originated from either you/ the illicit funds depositor/ any other user that deposited during this timeframe. Because of this you may be in for more explanations than you imagined in case your coins get frozen.

With Whirlwind the privacy set is always the total amount of deposits into the platform, so in normal conditions any accusation is baseless. It's one thing to go after someone when you have 5 "suspects" (if only 5 users deposited during that timeframe), and another to do it when you have thousands of "suspects" (all depositors since the start of the service).

It can't hurt to have better privacy no matter what you plan to do afterwards.

[suzanne5223]

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

If you're using SPV wallet (an example is electrum wallet) and you connect the wallet directly the central server you're connected to have the chance to know your IP address. Besides, the central server can merge your transaction wallet addreses and that's why it's good to make use of Tor when using SPV wallet to prevent this from happening.

[NotATether]

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.

Not exactly. If you're using change addresses, there's no address reuse for chain analysis services to take advantage of. Bonus points if you use multiple change address (though it will increase your transaction fees).

Regarding IP address leaks, well this can be controlled if you use a private Electrum server, which in turn is connected to some full node somewhere. Though I strongly believe that network encryption of some sort would dramatically improve privacy for everyone. Perhaps Tor being made the default protocol for this kind of stuff.

[LoyceV]

Electrum wallet is not a privacy wallet and the unused addresses you see on the electrum wallet can be linked to the wallet owner.

Not exactly. If you're using change addresses, there's no address reuse for chain analysis services to take advantage of.

I assume that chain analysis companies run many Electrum servers, and if your wallet connects to a random wallet each time, chances are they already know all the addresses that belong together in a wallet.
One way around that would be to add misinformation: create a watch-only wallet and import many addresses that aren't yours. But that makes using the wallet and sending a transaction impractical.

If you're using SPV wallet (an example is electrum wallet) and you connect the wallet directly the central server you're connected to have the chance to know your IP address. Besides, the central server can merge your transaction wallet addreses and that's why it's good to make use of Tor when using SPV wallet to prevent this from happening.

Tor doesn't stop the Electrum server from knowing which addresses belong to your wallet.