The blockchain and cryptocurrency space has developed, grown, and burst into the mainstream financial conversation at a breakneck pace. As investors and developers enter this arena, they should be mindful of the legal and regulatory implications that could follow. One area of particular concern is the use of crypto mixers.
Crypto mixers (or coin mixing services) are a way to improve the anonymity of Bitcoin transactions. By combining coins from many different owners, they make it harder to trace the source of a specific wallet or transaction. These services also can help people avoid the consequences of illegal activities like money laundering and fraud.
How a crypto mixer works is quite simple. When someone deposits tainted Bitcoin into a mixer, the service mixes it with the deposited coins of other users, and then sends out a new set of clean coins to the original depositor, minus a small transaction fee. Mixers can be both custodial and non-custodial, but most of the non-custodial ones are designed to be more secure than their custodial counterparts.
Some non-custodial mixers are designed to increase the difficulty of tracking a user’s coins by requiring that withdrawals be made in increments that are a random number of days apart. Others attempt to obfuscate their existence by using a random public key as their identifying address.
As more and more of our financial lives move online, the need for privacy has never been greater. A crypto mixer is a vital tool for striking the balance between freedom and responsibility in this emerging landscape. cryptomixer