Bitcoin Mixing- Everything You Should Know About It


Jean Nichols | Updated: 26-07-2021 09:50 IST | Created: 26-07-2021 09:50 IST
Bitcoin Mixing- Everything You Should Know About It
Image Credit: Pixabay

Maybe you've heard people talk about Bitcoin mixing or read about it somewhere, but you want to know more about it. Well, some people argue that Bitcoin mixing enables them to secure and safeguard their identity.

A primary promise for Bitcoin is to keep transactions accurate while protecting the user's privacy. That's because it uses blockchain technology or a public distributed ledger that records every Bitcoin transaction. While this technology has worked perfectly, humans have ways to reveal the real-world identities of the users. Thus, there's nothing like the pseudonymized identity of a Bitcoin user.

Most importantly, however, is that only the user's Bitcoin address is traceable back to them. And even that address is typically anonymous to some extent. Nevertheless, people can link Bitcoins back to you in other ways. For instance, if you withdraw funds via a system like trustpedia.io/trading-robots/immediate-edge/ or any other crypto exchange with your identity details, the platform can trace the transaction back to you.

Thus, a person or entity that knows where and how to look can trace a transaction to the involved parties' real-world identities. And this has prompted some parties to look for ways to enhance their real-world identities' protection. And Bitcoin mixing is one of these methods.

Bitcoin Mixing Definition

Bitcoin mixing refers to the process of allowing a user to mix tokens with other users. A Bitcoin mixer provides a pool of resources or funds to enable users to make their coins anonymous with a trail ending and restarting with them. Users can obscure a link between their real-world identities and Bitcoin addresses using a mixing service. And this makes it easier for Bitcoin users to keep their transactions private.

How Bitcoin Mixing Works

Bitcoin mixing is straightforward because it entails using third-party software to provide a place where a user sends Bitcoins. This party swaps the tokens that another user sent previously to the first user. That way, the Bitcoin transactions trail created by the coins that a user wants to mix breaks and new coins replace it with a different trail. Thus, Bitcoin mixing enables a user to ensure that nobody knows who sent them tokens or to who they sent their coins.

The third-party software that a Bitcoin mixing uses is called Bitcoin Tumbler or Bitcoin mixer. Essentially, a Bitcoin mixer is an intermediary between the user and the sender or recipient of the tokens. Some people consider a Bitcoin mixer as a randomizer of coins that ensures that what a person sends or receives is random and can't be traced to their Bitcoin wallet.

Why People Mix Their Bitcoins

Perhaps, you've heard that criminals are the only parties concerned about Bitcoin transactions' anonymity so far. However, this is false. When transacting with Bitcoin, everybody wants to protect their identity and privacy. That's because privacy is a human right.

Bitcoin mixing enables this cryptocurrency's users to prevent third parties from monitoring their economic behavior. These third parties can include advertising companies and intrusive businesses keen to analyze their prospects' purchasing behaviors for advertising purposes.

Also, Bitcoin mixing can help you avoid real-life threats. For instance, criminals can access your Bitcoin transactions' history on the blockchain network. That means they can monitor your financial behavior and even know when you receive a significant number of Bitcoins. To avoid this, people use Bitcoin mixers to cover their transaction trails.

The Bottom Line

Bitcoin's primary promise is the anonymity or privacy of the user. However, some entities can uncover the real-world identities of the users on the blockchain network. For this reason, people use Bitcoin mixers to break the links between their transactions and their identities. Thus, Bitcoin mixing enables individuals to transact with this virtual currency without other people snooping around.

(Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)

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