Coin mixers allow users to mix up transactions between different cryptocurrency addresses, so they become untraceable and cannot be followed back to the initial sender or receiver of the assets.
In essence, coin mixing ensures that both parties in a transaction remain anonymous. Cryptocurrency transactions are all recorded on a distributed, public blockchain ledger, which means that anyone, anywhere, has access to these records. By inputting a public address in a block explorer, you can get information about all transactions made to and from this address. This incredible level of transparency is one of the innate characteristics of blockchain technology and cryptocurrencies. Even so, some parties would like to benefit from ultimate anonymity, which is why coin mixers were created.
Coin mixers are software companies which serve as a middleman between parties looking to send and receive cryptocurrencies. For example, Person A is looking to send Person B one Bitcoin (BTC); however, they do not want this transaction to be traceable. Person A would turn to the services of a coin mixer company. They will send the amount of Bitcoin to the coin mixer. The coin mixer will then combine this transaction with numerous other transactions, accumulating a larger amount of the same cryptocurrency and then redistributing it to the selected receiving addresses.
However, an important note here is that coin mixers charge a fee for their mixing services. This essentially means that when sending cryptocurrency to a coin mixer, you need to consider the service fees, which will be deducted before funds are redistributed to their intended receiving addresses. It is important to take into account that most coin mixers charge a percentage-based fee. Consequently, the larger the amount of cryptocurrency you input into the mixer, the more you will have to pay in fees.
Coin mixers have become an essential service in the cryptocurrency industry, as many people are looking to keep their anonymity. This also concerns big enterprises and corporations looking to remain anonymous when transferring larger amounts of funds.
Yet coin mixers remain a controversial topic in the cryptocurrency world. Some people defend the need for such services to keep the innate anonymity that was part of the conception of cryptocurrencies. However, others argue that coin mixers facilitate the transaction of funds for illegal activities. Not only that, proponents arguing against coin mixers state that this software can be easily manipulated to defraud customers and steal their funds. Both sides of the argument have valid concerns; however, for the moment, coin mixers remain a service available to the crypto community.
Coin mixers are increasingly popular among cryptocurrency whales, who are looking to conceal the amount of cryptocurrency they have. Large holdings of cryptocurrency can attract unwanted attention towards a holder’s address, thus putting them at risk. Considering this, cryptocurrency investors usually turn to the services of coin mixers to ensure the safety of their assets.