How to Use Bitcoin Anonymously

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How to Use Bitcoin Anonymously

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Many users of Bitcoin are aware that it is not a private coin. This is despite the fact that digital currencies can be used independently without recourse to third parties. This trend is changing as many users desire more privacy. This is especially so with an increase in incidences of hacks leading to loss of funds by some users. 

As privacy coins such as Monero became more prominent, more people would want to see such features in Bitcoin but the fact that the codebase was written to make BTC pseudonymous means that there is no possibility that it would ever become completely private.

In reality, using Bitcoin as it exposes the user to several third-party analyses some of which may be malicious and could lead to avoidable losses. This is why it is important to use the cryptocurrency anonymously. This is where blenders come handy. 

Bitcoin mixers also are known as blenders or tumblers are platforms that make it almost impossible to follow the transaction history of a wallet. This consequently enhances the anonymity of the owner and helps keep their coins safe. 

Bitcoin mixers such as Bitcoinmix.org accomplish this by dissociating a wallet from its transactions by receiving coins with known history to the platforms’ reserve and sending completely different coins to another wallet designated by the owner that sent the coins. So if you’re thinking of remaining anonymous while using Bitcoin, you simply send your coins to a mixer and receive ‘new’ coins from it.

This is remarkable since blockchain analysis has made it possible that virtually all transactions on the Bitcoin network could be traced. The trails eventually lead to individual wallets. These wallets can be traced to their owners through logged IP addresses. Furthermore, with increasing regulatory laws requiring exchanges to demand KYCs, knowing the identity of the owner of each wallet is easy.

In an age in which privacy is increasingly difficult to achieve, expectations were high that the so-called ‘trustlessness’ of blockchain would enhance user anonymity. Tumblers effectively filled the privacy vacuum of Bitcoin.  

Nevertheless, we should be aware that blenders could pose some risks to their users. Using random blenders could result in losses since fraudsters are known to clone good mixers such as Bitcoinmix.org. Sending your funds to the unknown or unreliable mixer would definitely result in losing your coins. It is also important to know that blending uses special algorithms that ensure that the coins are efficiently dissociated. Using a tumbler that doesn’t do a good job at mixing your coins wouldn’t fool anyone but would rather give you a false sense of security.

This is why it is important to choose a good blending service which also has the ability and capacity to effectively mix your coins. Tumbling services make it easy to conceal wallets with a large amount of coins while using merchant services. The buyer simply sends funds using the address provided by the mixing service. This keeps such wallets off the sights of bad players.

Updated 11:39 AM UTC+8, 11 May 2020
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