What is a Bitcoin Tumbler?
Bitcoin tumblers (also known as mixers) are pieces of software or services that take a user’s coins and mix them with the coins from other users until it’s impossible to trace who sent which coin. Then, the tumbler sends the users’ coins back to them at random addresses. This breaks the link between a user’s on-chain Bitcoin transactions and their identity, protecting financial privacy for users who value it.
While many people believe that the Bitcoin blockchain provides complete anonymity, it is important to understand that this is not the case. Anybody with a copy of the blockchain can view the full transaction history associated with a particular Bitcoin address, and even if you use a private cryptocurrency like Monero or Zcash for your transactions, there’s still no guarantee that your on-chain activity will remain anonymous. This is why tumblers are so important, although they cannot be used to hide illegal activities.
There are two main types of tumblers: centralized and decentralized. Centralized tumblers require that you trust the tumbler service with your bitcoin, while decentralized tumblers use protocols such as CoinJoin to reduce the need for trust. Decentralized tumblers also tend to have lower service fees than centralized ones. In terms of legality, decentralized tumblers should be considered safer than centralized ones as they are unlikely to be subject to anti-money laundering (AML) and Know Your Customer (KYC) regulations. Nevertheless, AML and KYC compliance are important for both users and tumblers. Bitcoin Tumbler