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Cryptocurrency tumblers: principles of operation and service choice

11/02/2019 15:28
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Since the moment of its creation the cryptocurrency was conceived as something that is safe and completely anonymous. However, in real life, this idea was realized only partially. Therefore, cryptocurrency operations remain beyond the control of state structures (since cryptocurrency still does not have precise regulation by banks and states). However, the Bitcoin blockchain entries are open, and the information about transfers is sent to all network members. Even without a signature, cryptocurrency transfers remain visible to other users, and they can still be identified in Bitcoin blockchain.

However, such services as сryptocurrency tumblers help to ensure complete anonymity of Bitcoin transfers. Now, if users need a truly anonymous transfer of funds, they can easily do it.

Cryptocurrency tumbler concept

Cryptocurrency tumblers are Internet resources, where the user can make the most secure and anonymous transactions on the Bitcoin network. With cryptocurrency mixing services, it becomes impossible to track a transaction, even when it is recorded in the blockchain.

The principle of operation of such services is pretty simple. First, Bitcoin will be transferred to the common wallet of such a cryptocurrency mixing service, and then money will be mixed with the funds of other users, and only after that, your transaction goes to the recipient.

Once the amount is small, the recipient will get it with one transaction. Nevertheless, if the transfer sum is large, it could be divided into small parts, so the recipient will have several smaller payments. Thus, it becomes easier to hide the path of cryptocurrencies and make the transfer of funds as anonymous as possible.

All Cryptocurrency tumblers are conditionally divided into two main types: the centralized and peer-to-peer ones.

  1. Centralized cryptocurrency tumblers belong to the first generation of mixing services. In such cryptocurrency mixing services, the quality of anonymity often depends on the total number of users, while its administration is fully responsible for the security of the cryptocurrency mixing service.
  2. Peer-to-peer cryptocurrency mixing services stand for a sophisticated version of centralized cryptocurrency mixing services. In this case, anonymity is ensured without the intermediary influence of the developers.

Cryptocurrency mixing process

Cryptocurrency tumblers algorithm is extremely simple:

  1. First of all, money goes to the site from different users. As soon as the funds are on the portal, they are mixed by built-in algorithms. Only after these actions, the money will be sent to the users’ wallets. As you can see, such services got their name from the process of mixing currencies.
  2. After the service has finished mixing, the money is sent to the customers. Nevertheless, it is important to remember that the overwhelming majority of such sites charge a service fee.
  3. When all the mixing goes correct, it becomes almost impossible to trace the path of the cryptocurrency and establish its original owner.

Cryptocurrency mixing services features

Before you start working with cryptocurrency tumblers, remember that all the services of this kind have their specific characteristics, which are also important to consider during the process of work.

  1. The speed of work. When you are working with cryptocurrency tumblers, your funds go through several transactions. All these actions take extra time. First, your cryptocurrency goes to the general pool of coins, and then the miner confirms its transaction. Only after the confirmation, the coin can be transferred to other wallets.
  2. In addition, the number of transactions can affect the speed – as it was mentioned earlier, large amounts can be transferred in parts, which increases the number of transfers.
  3. On the contrary, such services do not require any documents from users and this speeds the work up. At the same time, this may be a minus, because it is more difficult to understand how honest your service is.
  4. The speed of some cryptocurrency mixing services is limited in time. For example, if the service seeks to increase the level of confidentiality, it will not store information for more than 72 hours. Therefore, the generated address will work only within the system and only for a day, and it will no longer be possible to accept other payments with the same address.

In the process of work, it is important to remain careful and read the messages from the administration of the site. For example, the mail can contain letters of guarantee, the address of the wallet and a special code: using all of these you can prove that the funds belong to you. This information can also be useful for communication with technical support if this is necessary. Therefore, all the letters that the cryptocurrency tumbler sends you are important and should be reviewed so that you do not accidentally delete something important.

The risks of cryptocurrency mixing services

Theoretically, all cryptocurrency mixing service sites should work properly to help their clients. However, not all of such sites work perfectly. That is why it is important not only to choose a convenient service but also to exclude all sorts of disadvantages of low-quality cryptocurrency tumblers.

  1. The risk of a scam. Cryptocurrency tumblers can attract the attention of fraudsters. It is good to remember that such sites rely on the trust of users. This means that anyone can administer the service, and you can never know if these people are fraudsters or not. Thus, it is recommended to check all mixing services carefully: clarify the reputation of the service among other users, read reviews and compare with the ratings of mixing services.
  2. Money laundering. There is a risk to get under suspicion of money laundering. It is actually very small, but it exists and we should not forget about it.
  3. Clustering analysis is a special technique that helps to decipher a lot of well-known cryptocurrency mixing services. Therefore, Bitfury and Chainalysis created similar algorithms. Using clustering analysis, such companies are able to establish Bitcoin addresses that are interconnected even through a cryptocurrency mixing service.

How to choose a reliable cryptocurrency mixing service

Each cryptocurrency tumbler has its own characteristics, and the same feature may be necessary for one user and not important for another. However, there are several key features that any reliable service should have. Before choosing your first cryptocurrency tumbler, pay attention to such factors:

  1. The reputation of the service. As it was mentioned earlier, the cryptocurrency mixing service should receive positive feedback. Nevertheless, be careful with those services that have only positive comments from users - sometimes fraudsters can write such comments just to get new users. Check out the large forums and try to evaluate each review impartially.
  2. Check the phishing sites. These are the copy websites, which use the reputation of the original services to deceive users. If the cryptocurrency mixing service you choose has such a double, check the authenticity of the site before sending your money to the cryptocurrency mixing service.
  3. Blockchain analysis. The mentioned clustering analysis problem gives analysts the opportunity to draw parallels between user wallets and the services they use.
  4. Choose services with high-quality technical support. It would be better if the support service is available 24 hours a day and 7 days a week. You can check the support team by contacting them before your cooperation to clarify a couple of basic issues - for example, ask something about customer service or operation.
  5. Cryptocurrency pools that are too small. As a rule, such a problem often occurs with new services that have not yet time to gain popularity and fill their Bitcoin reserve. Thus, if the amount you wish to deposit turns out to be greater than the reserve of the cryptocurrency mixing service, the entire amount will be processed and transferred in parts.

How to increase your transactions’ anonymity

In life, the user can face different situations and sometimes will need the highest level of anonymity. Even if you have already used the services of mixing, there are several ways to enhance the effect and make your transactions even more confidential:

  1. Make several deposits instead of one. To do this, divide your money into smaller batches and make several transactions. Thus, it will be more difficult to find the authors of several different payments than to do the same with one large transaction.
  2. If your conditions allow, transfer each batch of money from different Bitcoin wallet. Therefore, you can tangle your traces even more.
  3. If possible, do not withdraw the funds just after you receive them. The more time passes between money sending and withdrawal, the more difficult it will be to find a parallel between money and the people.
  4. In the same way, as with sending money from different cryptocurrency wallets, you can also withdraw funds through different addresses. In this case, the delay in time can also benefit anonymity.

It is important to remember that the cryptocurrency mixing service services are convenient when we are talking about a simple transfer from person to person. Nevertheless, when you make the payments online, then anonymity, in this case, will be more difficult to maintain, because with such operations it is much easier to establish a coin holder.

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