Lot of individuals in the cryptosphere are of the opinion that Bitcoin is completely anonymous. However, this is not the case. There are several crypto analysts who can actually join together all the pieces of data from publicly available information on blockchain explorers and figure out where a Bitcoin or cryptocurrency transaction originates.
However, there are some individuals who are privacy oriented. They are not necessarily involved in any illegal transaction but only looking for privacy apropos their financial transactions. To do that, these individuals make use of a Bitcoin tumbler to mix their digital assets with the aim of erasing the transaction history in the process.
Notably, the Bitcoin tumbling services do the task of mixing the Bitcoins from various users and then allocating different Bitcoins to different users in exchange for a small transaction fee. However, they are legal or not, that still falls into a grey area.
What Is a Bitcoin Tumbler?
A Bitcoin or crypto tumbler can be defined as a service that blends virtual currencies obtained from various customers to make their origin incomprehensible.
It is to be noted that majority of the cryptocurrencies or tokens are not wholly unidentified. With the right expertise, one can trace BTC transactions to exact crypto wallets. Now, in turn, in case the individual using the digital asset relates the crypto wallet address to a precise account holding personally identifiable information (for example- name, bank account, ID card, etc.), the cryptocurrency user is no longer unidentified.
The Bitcoin blockchain is entirely open and any individual around the world is free to download it for analysis. One can also make use of a blockchain explorer to investigate wallet addresses and associated transactions. Because of the open network and decentralization, all BTC transactions are traceable and are available in the public domain.
Bitcoin Mixing – Using Bitcoin Anonymously
A Bitcoin mixer or BTC tumbler detaches the associations between Bitcoin wallet addresses. For instance, A sends a Bitcoin to B. Now, B sends this Bitcoin to C. In turn, C sends it to D. If one investigates the Bitcoin blockchain, there exists a comprehensible link between D and A. This is because, the transferred cryptocurrency passes through linked crypto wallet addresses.
Nevertheless, if instead of sending it to B, A sends the digital currency to a Bitcoin tumbler first, the crypto sent from the tumbling service no longer have any comprehensible linkage with the initial wallet address of A. By using the service, the link gets cracked. As a result, A stays unidentified.
In essence, bitcoin tumbler services like Bitcoinmix.org, boosts the privacy of the user by separating their cryptocurrency wallets from preceding transaction. The Bitcoin mixer breaks the visible transaction chain by sending inbound tokens to diverse outgoing cryptocurrency addresses. One usually gets the same output, which he sends to the Bitcoin mixer. Only the transaction and service fees are deducted from the overall amount. Apart from that, the cryptocurrency tumblers also randomize the output amounts by transferring dissimilar transaction sizes to disunite the links between incoming and outgoing Bitcoin addresses.
Are Bitcoin Tumblers Legal?
Mixing your Bitcoins to eliminate its past is not explicitly illegal if one is just using it only to protect his/her privacy and is not indulged in any money laundering activities. There are no clear laws that ban Bitcoin mixing and one can allegedly use a Bitcoin tumbler to take care of one’s privacy.
However, there is no dissent from the fact that Bitcoin tumbling is a useful tool if an individual wants to cash out money acquired by unfair means in the form of Bitcoin or other digital assets. Bitcoin or cryptocurrency tumbling services have strong links with illegitimate doings due to the anti-social elements involved in some cases.
Notably, the European Union also takes a hazy view of Bitcoin tumbling services. In 2019, the Dutch Financial Crime Investigative Service apprehended the well-known Bitcoin tumbling website, Bestmixer.io. Apart from that, the establishments apprehended services tumbling services based in Luxembourg and the Netherlands also, taking help of Europol.
Tumbling Bitcoins is not explicitly illegal. However, it still falls in a grey area. Nevertheless, the actual danger with crypto tumbling is that one’s digital assets might be grouped up with other users’ ill-gotten crypto money. In many cases, one is not even guilty by association. However, the individual might lose his Bitcoin or other linked cryptocurrency in the case of a constabulary confiscation.