A Bitcoin MIxer is a service that allows users to hide the link between their wallet address and real-world identities. This is because Bitcoin transactions are recorded on the blockchain, which is a public ledger that anyone can view. As a result, people who know your wallet address can trace where the funds you send them are going. This is problematic because it gives hackers and other bad actors a way to track your spending habits.
Mixers obscure these traces by mixing your cryptocurrency with other users’. They then redistribute your funds, so it’s nearly impossible to tell which coins came from which source. This is why mixers are so useful for people who value their privacy.
The most popular mixers include WhirlWind, CryptoMixer, Sinbad, and Samourai. They all provide the same basic services, but some offer more privacy features than others. For example, some mixers don’t keep logs at all, while others delete them automatically after a certain amount of time has passed.
Some centralized mixers use protocols like CoinJoin to fully obfuscate transactions. However, these methods also create trust issues with the company that runs them. As a result, they may save your private information or tie you back to these transactions in the future. This type of mixer is less secure than decentralized options that use Schnorr or a similar protocol to achieve the same goal.
Although Bitcoin mixers aren’t illegal, they can be used to conceal criminal activities such as money laundering. As a result, some governments place restrictions on them. In the US, for instance, Mixers must register with FinCEN and follow Bank Secrecy Act rules.