fbpx

Keeping Crypto Private From Surveillance: What Are Crypto Mixing Services?

Keeping Crypto Private From Surveillance: What Are Crypto Mixing Services?

Crypto Mixing

Credit: thomaguery / istock https://www.istockphoto.com/portfolio/thomaguery?mediatype=photography

Cryptocurrencies such as Bitcoin and Ether feature a publicly visible register for all transactions, which means that transactions made on their blockchain are easy to trace — unless the sender uses a crypto mixing service to increase anonymity.

A mixer, also known as a tumbler, mixes different streams of potentially identifiable cryptocurrency, making it harder to trace and improving the anonymity of transactions.

The Bitcoin owner transfers the money to the mixing service, which mixes it with that of other users and transfers the mixed currency to the desired address, meaning there is no connection between the original transaction and this address.

The mixing service usually charges a fee of 0.25 percent to 3 percent of the amount to be mixed.

In the past, this has helped people cover their tracks on the Bitcoin ledger since all transactions are recorded and immutable on the blockchain. This made mixers attractive for hackers and criminals.

In some jurisdictions including the U.S., mixing services are illegal under anti-structuring laws.

Anti-structuring law was passed in the U.S. to check on money launderers who try to stay under regulatory radar by breaking down their large transactions into smaller ones so that they cannot be detected. In the U.S., transactions larger than $10,000 are usually flagged for documentation and tracking by state financial agencies, so money launderers usually transact below this limit to avoid detection.


Are you interested in getting smart on Life Insurance?
No Doctor Visit Required, Get Policy for as low as $30 per Month
Click here to take the next step

Mixing services such as Helix or Bitcoin Fog have been accused of money laundering. Helix founder Larry Dean Harmon pleaded guilty earlier in August to charges of laundering $300 million.

Some people, however, argue that that crypto mixing enables them to secure and safeguard their identity. Being able to conceal their economic behavior from tracking by third parties such as advertising companies and intrusive businesses is a key benefit.

It can also help users avoid real-life threats from criminals who can access transactions made on the blockchain network and track financial behaviors of their victims.

The cryptoverse has decried government actions to clamp down on crypto mixing service providers, calling it a gross overreach by state agencies into individual liberties.

“This kind of shutdown creates selective pressure for tumblers that cannot be shutdown. And we know, from the research world, that it’s possible to build much better ones,” said Emin Gün Sirer, a professor at Cornell University and founder of Ava Labs, in a tweet.

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?