Difference between revisions of "Mixing service"

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(See Also: Removed entries for mixing services and added an entry for Mixing services category.)
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Mixes ones funds with others with the intention to confuse the trail back to the original source of the funds.
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{{outdated}}Using bitcoins is a flawed way to stay [[Anonymity|anonymous]] while making your purchases, donations, and p2p payments. But Bitcoin transactions are never truly anonymous. Bitcoin activities are recorded and available publicly via the blockchain — a comprehensive database which keeps a record of bitcoin transactions. And when you finally use Bitcoin to pay for goods and services, you will of course need to provide your name and address to the seller for delivery purposes. It means that a third party can trace your transactions and find ID information. To avoid this, such mixing service provide the ability to exchange your bitcoins for different ones which cannot be associated with the original owner.
  
Compared to the traditional financial systems this service might be the equivalent of moving funds through banks located in countries that have strict bank-secrecy laws. Such countries include the Cayman Islands, the Bahamas, and Panama<ref>[http://en.wikipedia.org/wiki/Offshore_bank Offshore bank]</ref>.
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Prior to the advent of trustless alternatives, '''mixing services''' (also called '''tumblers''') were used to mix one's funds with other people's money, intending to confuse the trail back to the funds' original source. In traditional financial systems, the equivalent would be moving funds through [[Wikipedia:Offshore bank|banks located in countries with strict bank-secrecy laws]], such as the Cayman Islands, the Bahamas and Panama.
  
Mixing helps protect privacy however mixing can also be used for money laundering.
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When mixing bitcoins, you send your money to an anonymous service and, if they are well-intentioned, they will send you someone else's tainted coins. So, now, whatever those coins were used for may now be traceable back to you. Additionally, mixing large amounts of money may be illegal, being in violation of [[Wikipedia:Structuring|anti-structuring laws]].
 
 
The term money laundering refers to the practice where this mixing is performed because the funds are illegally obtained.  After laundering, the funds appear legitimate<ref>[http://en.wikipedia.org/wiki/Money_laundering Money laundering]</ref>.
 
  
 
==See Also==
 
==See Also==
  
 
* [[Anonymity]]
 
* [[Anonymity]]
* [[:Category:Mixing Services|Mixing services]]
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* [[:Category:Mixing Services]]
* [http://www.bitcoin.org/smf/index.php?topic=2893.0 RFC: Bitcoin Mixnet]
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==References==
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{{wp|Cryptocurrency_tumbler}}
<references />
 
  
 
[[Category:Financial]]
 
[[Category:Financial]]
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[[Category:Privacy]]

Latest revision as of 13:51, 21 September 2021

Using bitcoins is a flawed way to stay anonymous while making your purchases, donations, and p2p payments. But Bitcoin transactions are never truly anonymous. Bitcoin activities are recorded and available publicly via the blockchain — a comprehensive database which keeps a record of bitcoin transactions. And when you finally use Bitcoin to pay for goods and services, you will of course need to provide your name and address to the seller for delivery purposes. It means that a third party can trace your transactions and find ID information. To avoid this, such mixing service provide the ability to exchange your bitcoins for different ones which cannot be associated with the original owner.

Prior to the advent of trustless alternatives, mixing services (also called tumblers) were used to mix one's funds with other people's money, intending to confuse the trail back to the funds' original source. In traditional financial systems, the equivalent would be moving funds through banks located in countries with strict bank-secrecy laws, such as the Cayman Islands, the Bahamas and Panama.

When mixing bitcoins, you send your money to an anonymous service and, if they are well-intentioned, they will send you someone else's tainted coins. So, now, whatever those coins were used for may now be traceable back to you. Additionally, mixing large amounts of money may be illegal, being in violation of anti-structuring laws.

See Also