Bitcoin privacy and fungibility are constantly threatened by blockchain analytics tools that allow governments and exchanges to monitor the origin and provenance of bitcoin transactions. These practices can be fought by taking advantage of some bitcoin mixing services such as the one offered by BitMix.biz.
Financial Privacy Matters
In the financial industry, privacy is a very important element. To date, the only form of payment that guarantees the highest level of privacy is cash, but, it is disappearing faster and faster. In the last 50 years, the use of electronic forms of payment has grown considerably, improving our “experience” as a user but sacrificing (unknowingly) our privacy. Paying with a smartphone is obviously convenient, but all digital payments have different implications – compliance with customer recognition (KYC), anti-money laundering (AML) and other policies.
Banks and governments are constantly pushing for a cashless society with the excuse of acting for the safety of citizens and to eradicate black money from circulation, and are doing it successfully. They are “nudging” us towards a cashless society in order to maximize profits and have total control over every financial transaction we perform.
They made us believe that cash was inconvenient and that eradicating it was a collective interest. The truth is that all interests are on the side of financial institutions. By pushing ourselves towards this reality we are certainly gaining simplicity and ease of use. But at what price? Digitizing payments would marginalize even more all those people who do not currently have access to banking services, some studies show that cash incentives savings unlike all digital solutions that encourage consumption and finally as previously mentioned a total control and tracking of every single financial transaction.
Bitcoin Can Be Monitored
Unfortunately, Bitcoin is far from private. Its level of privacy depends exclusively on the user’s ability and in most cases Bitcoin is used with a level of privacy close to zero. This has serious implications for its fungibility and global acceptance. Being completely transparent and traceable, over the years companies have developed tools to analyze the blockchain and monitor all bitcoin movements.
In addition, although bitcoin was born to get rid of intermediaries, to date most of the bitcoins are held by exchanges that have become full-fledged financial institutions that must comply with AML regulations. And guess what? To understand the origin or destination of bitcoin transactions, exchanges use blockchain analysis companies’ services. Without considering that exchanges can also release data to government agencies that would have full access to users’ account balance or transaction history.
This type of process, in addition to being a means of control for governments, affects bitcoin fungibility, the property of a good whose individual units are essentially interchangeable, and each of its parts is indistinguishable from another part. For instance, certain coins that are known to have been used in some form of an illegal transaction can become undesirable whereas some unmoved coins in old wallets can become collectibles and hence more desirable. The problem here is that certain units of bitcoin may no longer be interchangeable if some are considered tainted and hence less desirable. This could lead to a price difference between clean bitcoins and dirty bitcoins, thus damaging its usefulness.
What Are the Solutions?
Fortunately, there are solutions to the problems mentioned. The Bitcoin protocol is constantly evolving and some of the expected changes, such as Schnorr signatures and Taproot, will touch precisely this issue. Alternatively, services including mixers that allow people to hide the source of their coins or special wallet such as Wasabi, are a very powerful tool to obtain greater privacy.
Blenders are used to mix one’s funds with other people’s money, intending to confuse the trail back to the funds’ original source. The main goal of every scrambler is to break the connection between the address of the sender’s wallet and the recipient’s wallet. As a result, even if anyone decides to trace the transaction, it will be impossible to find out where they have been delivered to. There are several bitcoin tumblers on the market and one of the best is definitely bitmix.biz.
Usually, these platforms allow mixing only Bitcoin but this is not the case for BitMix which also supports Litecoin and Dash. BitMix also supports Clearnet, Tor and NoJS programs which give the transaction processing the maximum privacy and security. The platform is easy and intuitive and is available in 9 different languages, a rare feature for this type of service. To make the mixer available to everyone, the minimum mixable amounts are as low as 0.005 for BTC and 0.015 for LTC.
How Does It Work?
The blender used pre-mixed and pre-cleared crypto coins, which is why the process of cleaning your coins begins as soon as you click the Start Mixing button and happens in one transaction confirmation. During the cleaning process, your coins are divided into small parts and mixed with other people’s crypto, passing through many addresses specially created for this. As for costs, BitMix uses a unique approach that distinguishes it from its competitors, the fees are in fact dynamic between 0,4 and 4 percent. Manually or automatically changing the percentage of the fee for coin mixing, prevents the scammers from determining exactly what amount was transferred to another address.
To further increase security and anonymity, customers are given a unique code after each operation which allows them to lock their initial coins on the BitMix website so that they are not able to receive any of such coins in subsequent BitMix transaction ever. This ensures that users remain untraceable.
Finally, in order to make blockchain analysis really impossible, there is something called Randomize options which allows users to receive at least 2 back transactions with clear (mixed) coins per output address are guaranteed.
BitMix uses an interesting way to secure its project. A typical scam that tumblers are exposed to is being deceived by scammers who pretend to be managers or developers and try to steal money from users. In BitMix, any address provided for customers can be easily verified as one generated by BitMix servers, thus reducing any possibility of being scammed by thieves.
BitMix does not just offer this service but also offers a partner program that pays customers who recommend the platform to other users. Payments are sent immediately a transaction is completed by the person they refer to. For organization, instead, BitMix has made its APIs available which allow any service to benefit from its privacy functions for transactions management. De facto, any project can create its own bitcoin mixer just by attaching BitMix’s API.
Although Bitcoin was born with the aim of creating a monetary system outside the control of the government or central banks, have seen how using it properly is not so immediate. Relying on services such as that provided by BitMix is a fundamental step to obtain greater privacy and at the same time encourage the fungibility of bitcoin.