Tumbling Bitcoins Is A Path Through the Rinse Cycle
Due to their government's restrictions and strong disagreements in a type of exchange that Bitcoin can, privacy is a must to a lot of people using it for confidential transactions. Some speculation says certain Bitcoin-related businesses may blacklist you due to using gambling sites. You can find in this article what are those few pointers on the variety of techniques of tumbling Bitcoin by sending satoshis through the laundry.
Why Tumble Bitcoins?
Complaints on forums about Coinbase arouse recently after using gambling sites, which already been experienced a few years ago. It is clearly stated in Coinbase's user agreement that gambling sites are not acceptable. And to those who visited marketplaces and uses the Dark Net, which is not only frowned upon by some Bitcoin service providers, but also puts these users at risk of jail time and criminal penalty.
There should be an extra safety measure when using Dark Net Markets (DNM) and visiting gambling sites by staying anonymous on a transparent and public blockchain. One can use by obfuscating their IP address, using a VPN, and surfing the net with an anonymizing browser in order to implement bitcoin anonymity.
On the other hand, we will be discussing another bitcoin method of privacy called coin tumbling, coinjoin, or coin shuffling today. Although some altcoins practice this natively within every transaction, we will focus on using tumblers with Bitcoin.
Coin tumbling platforms basically shuffle a bunch of transactions together like a deck of cards where eventually everyone gets the money back while obfuscating the origin of the funds.
Your bitcoins on the clearnet or over the hidden web using Tor, for example, can mix with a tons of websites. Some of them include Bitcoinlaundry, Bitmix, Bitlaundry, and even Blockchain.info which has a mixing service within their interface. Then DNM’s such as the Dream Market and Alphabay have coin tumblers at their marketplaces, among many other mixing services found on the deep web.
Mixing Coins via the Hidden Web
If you want to include more privacy to you transactions, you should probably do so over the deep web with multiple layers of obfuscation. You can send bitcoins to a wallet using clearnet first and also create a wallet under the cloak of Tor using wallets like Electrum.
The method which is called first hop and adds just another layer of confusion is actually the second process which is sending the Bitcoin you want to mix from the clearnet wallet to the one created via the hidden web.
And then, the last wallet you created you can continue creating a few wallets over Tor and completing hops depending on how far you want to go with privacy.
And finally, a user simply chooses a trusted Bitcoin mixing service and takes precaution on making sure the URL is 100% correct.
Most of all mixing services will charge fee for by means of their platform to do a mix, and some of them can be somewhat substantial. On the other hand, some could give you a high layer of anonymity with their premium services. Phishing sites are also threats that when using these services, you have to make sure on dealing with a correct and precise URL.
When the mixing is fully completed, sending of funds to the address created with Tor should be perform and some people would say you should send the funds to multiple addresses rather than just one. One can choose whatever methods they feel is best to protect themselves since everything is based on preference.
It is important to note what can happen when someone enters the wrong direction. A moment ago, after tumbling, one user sent the wrong fee of 291 bitcoin. That was a pretty big mistake, and ordinary users most likely don’t send an amount that large, but you never know.
Double checking every step you make is a good way to avoid mistakes like this when it comes to fee rates or website URLs.
Tumbling Still Not 100% Secure
There's no such software or cryptographic framework to date that is 100% anonymous, a very important thing to ponder. Users can play around with altcoins such as Dash or Monero if they believe these tokens do a better job at obfuscating transactions.
Monero uses what’s called ring signatures which shuffle tokens in an entirely different manner, while Dash uses a coin-mixing method based on the CoinJoin protocol. But even the privacy-centric altcoins are not perfect and very admired mixing services for Bitcoin like JoinMarket have been known to be susceptible.
Together with these platforms, other people have been using bitcoin VPN or Virtual Private Network to protect privacy and hopping or splitting funds among addresses. There's a report recently according to some software creators that a tracking service called BitCluster, can track user activity if all funds are sent to one address, even after tumbling.
At the same time, Bitcoin tracking services are becoming more prevalent these days as companies like Elliptic and Chainalysis are building protocol that monitors the Bitcoin blockchain for illegal activities.
Privacy is important and users should take precautions when using Bitcoin on DNMs or gambling platforms. Please perform due diligence and research prior to using any of the above-mentioned methods for mixing Bitcoins.