ADSactly Crypto: What Are Coin Mixers?

What Are Coin Mixers? Your right to financial privacy has never been more under threat we move into a cashless society. Cash gave us rights we took for granted, the ability to pay who we want for what we want without anyone getting involved. Now with the financial system moving into credit cards, debit cards, online payments and bank deposits, we providing central authorities with a wealth of data on our spending habits and have no control over what they see.

We are an open book, Bitcoin and other cryptocurrencies that have no privacy features are pseudo-anonymous since we cannot tell who the person is but we can see their wallet and the transactions being made by that wallet, how much they are, how frequent they are and the wallets they are sending it to, the history is all on the blockchain.

Anyone can access this history and with scripting tools and some background on the person, you are trying to track you can find out a fair bit about them. This is why some currencies like ZCash, Verge and Monero have focused on the privacy space.

Image source: - coinsutra.com

Mixing it up

Bitcoin and currencies other like Litecoin that do not have privacy options may be an open book but that doesn't mean you cannot add an additional layer of privacy to your transactions. Taking advantage of coin mixers is a great way to use your favourite coin, not lose value through and add additional admin by changing to privacy coins and still pay those you would like the values they would want.

What is a coin mixer?

Coin mixers are a 3rd party tool that takes your cryptocurrency transaction and mixes it with a giant pile of another cryptocurrency, and then sending you smaller units of cryptocurrency to an address of your choosing and covers the tracks of your transaction.

Coin Mixers generally charge between 1-3 % to mix a transaction and that's how these companies make money. The majority of coin mixers are centralised services but there are solutions where users don’t need to trust anyone. Possible decentralised solutions for coin mixing include

A Lightning Network-style payment channels side chain
Combining privacy coins in the mixing process

There is no outright winner in the mixing race so we will have to wait and see which option turns out to be the best solution.

How do coin mixers work?

These transaction tumbling services use of an algorithm that allows the service to obscure the history of the tokens they receive.

Users send their coins to mixer receives the coins, then it jumbled them up with a pile of transactions and sends it to a large number of addresses in small amounts. It is this process that gives the services their name as they are ‘mixing’

These jumbling of transactions make it is near impossible to determine the true history of a coin. In some cases depending on the mixer, to further obscure the history of the coin, the mixer may repeat the process a several times.

Once the process is completed, the tumbling service will send the ‘clean’ coins to an address specified by each owner of the original transaction.

Image source: - Worldcryptoindex.com

Get in the mix

Have you used a coin mixer before? Would you consider using one? What do you think of coin mixers?

ADSactly Crypto: What Are Coin Mixers?

Mixing it up

What is a coin mixer?

How do coin mixers work?

Get in the mix

Sources

Written by @chekohler

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