Dean

Dean

Owner, Editor, and lead writer for Cryptorials.

Cryptocurrency writer and trader since 2014.

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Dean

Why you need to learn how to use a bitcoin mixer

Bitcoin is not as private as many people seem to think it is. During its early days the original digital currency gained a reputation as being an ‘anonymous’ payment system, sort of like an electronic version of cash. This was largely due to its use on deep web market places frequented by criminals.

But Bitcoin really isn’t anonymous. In actual fact, for most people most of the time, it may well be significantly less private than conventional payment methods such as bank debit cards or credit cards. Everything that you do on the Bitcoin network: every payment you send or receive, is recorded on a public database that anybody can view any time they want.

When you use a traditional electronic payment method the company who provides it can see everything you do, and they may provide that data to government agencies and perhaps others, depending on their policies and your stated preferences. But all of your private financial information is hidden from the view of the general public.

Of course you don’t need to provide personal details to use a Bitcoin wallet that you have downloaded to your own computer. This makes it ‘pseudonymous’ – your addresses are effectively a pseudonym that you use instead of your real name. But even this level of privacy is only superficial; if you are a regular user of the network it is not particularly difficult for malicious adversaries, from hackers and thieves to government or corporate spies, to associate your Bitcoin addresses with your real world identity and then be able to view exactly how much wealth you have and precisely what you are doing with it.

The most common method to improve your levels of financial privacy protection is to use a ‘mixer’ (also sometimes called a ‘tumbler’)

How bitcoin mixers work

Without going into excessively complex technical details, mixers work by literally mixing up your payment with lots of other payments from other users. This makes it very difficult if not impossible for any observer to be able to work out who is actually sending money to whom.

An observer who knows your addresses will therefore still be able to see that you have sent or received a certain amount of money. But if you are using a mixer then they will not be able to tell who you have made a payment to.

When to use a bitcoin mixer

Mixers must be used by the personal sending money, as the payment is sent through the mixer and then on to its destination. It may be possible to receive coins through a mixer, but quirks imposed by may popular services such as expiring addresses or the need to send precise amounts to the addresses provided can make this difficult.

But it is also true that in order to get the best possible privacy many mixers will want to send multiple payments to different addresses – and if you are sending money to somebody else that can also make things awkward.

Because of this, knowing when to actually use a mixing service is often the most confusing part of the process. In order to help clear this up as much as possible I will provide an example use-case towards the end of the article after I’ve walked you through the step-by step process of how to use a popular mixing service. But for now, here are some common uses of mixers that you might like to consider:

  • Withdrawing coins from an exchange service where you must provide information about your real identity to a wallet on your computer or phone. This helps to reduce the possibility of your wallet being associated with your real world identity.
  • Withdrawing coins from a peer-to-peer market website to your private wallet.
  • Sending coins between two wallets or addresses you control – for example from a temporary receiving address created for a specific payment to your regular wallet.

A beginner’s guide to using CoinMixer.se

Actually using a Bitcoin mixer is not difficult, but can be intimidating for new users who don’t know where to go and don’t understand terminology.

In order to help you here is a step by step guide suitable for use by complete beginner’s to show you how to use one of the best and most popular mixing services.

Step 1

For the best possible privacy it is good practice to use the TOR network to connect to the mixing service. If you have TOR installed on your computer then you can use this link: http://coinmixibh45abn7.onion/en/bitcoin-mixing-service/rid/58674282/ . If you are not using TOR then you can also access the same service using this regular website link: https://coinmixer.se/en/bitcoin-mixing-service/rid/58674282/ .

Step 2

Open the wallet you would like to send your coins from, and make sure that you know the address you want to send coins to.

Ideally, it is best to have multiple addresses to send the coins to. You can send to a single address and this will still protect your privacy, but in order to protect yourself against the most determined adversaries it is better to use multiple addresses.

Step 3

Click ‘participate’ from the menu along the top of the screen. What you will see here can look confusing but it is actually very simple.

The page you are looking at should display a box with three fields for ‘output 1’: send to address, delay in hours (using a slider), and value in BTC. Underneath this is a button marked ‘more outputs’ that you can use to add a box for ‘output 2’, ‘output 3’ and so on.

I previously wrote that you should ideally send your payment to multiple addresses in order to maximise the effectiveness of the mixer. You need to create a new ‘output’ by clicking the button for each address you are sending to. Two addresses should be enough, but the more you add the more secure your privacy protection will be.

Add each of your addresses in one of the spaces marked ‘send to address’. For each address choose a different delay. This affects how long your coins will be inside the mixer. The bigger the gap between then the better, but obviously you also need to consider how long you are willing to wait for the payment to go through.

Select how much you want each address to receive. Don’t forget that you will also need to pay the mixing fee, so these amounts should add up to a few percent less that the maximum amount you have available to send.

Step 4

Complete the captcha to prove your are a real human being a click continue.

Step 5

Select the payment method you prefer: you can ask for an address and amount of coins to send so that you can manually enter them into your wallet software, a QR code, or a special Bitcoin link as used by many wallets.

Step 6

Make the payment!

Step 7

That should be all you need to do, but just in case there is a problem CoinMixer provides a ‘Letter of Guarantee’. Save this somewhere just in case you need to contact them to solve a problem. Once your payment has gone though you can (and should) delete it.

Example users stories

Lets take the example of a person who has purchased Bitcoins on an exchange which requires them to provide personal details and prove their identity. They would like to send those coins to an online store to make a purchase, but they don’t want anybody and everybody to be able to see what they are spending their money on.

This is a good example because it can be confusing how you actually use a mixer for this.

If you can deposit coins to a store account

In this case you could simply send coins from the exchange to the store using a mixer. This is the easiest way and may be enough for many users, but it doesn’t give you the best possible protection because you probably won’t be able to use multiple ‘output’ addresses in the mixer.

As long as you have a wallet which you are confident cannot be connected to your real life identity this is not a problem: you just use the mixer to withdraw from the exchange to your wallet, and then use this anonymous wallet to send coins straight to the store. I will publish an article on anonymous bitcoin wallets soon, but for now it is enough to say that if you aren’t sure whether your wallet can be traced back to you then there is a significant chance that it would be possible for a determined and well equipped adversary to connect your wallet with your computer’s IP address, and therefore your identity.

One ‘quick and dirty’ way around this while you are waiting for that upcoming article on wallets (please subscribe to be notified when its published!) is to create temporary wallets just for this purpose. This is a bit of a hassle but it works:

#1 Install the TOR browser

#2 Using the TOR browser go to an online wallet provider which lets you sign up without providing personal details. Two nice and simple wallets you could use are Coinb.in and ttps://blockchainbdgpzk.onion. Both of these sites lets you create a wallet using an email address and password combination – DON’T USE YOUR REAL EMAIL ADDRESS. You can use a fake address quite easily, just make sure you make a note of the address and password so you don’t forget it. Make a new wallet for each address you want to use; two should be enough, three is even better.

#3 Use the Bitcoin mixer to withdraw coins from the exchange to the addresses you created in the previous step.

#4 Send your coins from these addresses to your store account, and once the payment has gone through delete your records of the log-in details for the wallets you created. Make new ones each time you do this.

If you need to pay directly for a purchase

In this case you have a little bit of extra hassle, because you will need to create another temporary wallet to consolidate the payments by sending all the coins to a single address before making the payment. You will also find that you will either have to calculate the fees for every transaction in advance or you will need to send extra and then withdraw the change from this address to your regular wallet – using a mixer again to protect your privacy. For these reasons this method is probably not appropriate unless you really need to do it; most deep web markets allow you to deposit to your account balance before making payments to avoid this problem.