What are Cryptocurrency Mixers?
Cryptocurrency markets are notorious for being prone to price volatility. If you’re just getting started investing in crypto, it might be difficult to know when to buy your coins. There are so many new coins being released every day that it can be difficult to know which ones are worth backing.
This is where crypto mixers/tumblers come in. They’re services that make it easier to buy large amounts of different digital currencies at once. They can be useful for new investors who don’t have time to research and understand each new altcoin they’re interested in buying.
This guide provides a brief introduction to crypto tumblers as well as an overview of their pros and cons.
How do bitcoin mixers work?
To understand how crypto tumblers work, you first have to understand how cryptocurrency exchanges work. When you are conducting any kind of crypto transaction, buying bitcoins etc. an exchange, you’re actually trading with one. The service holds your BTC and you have to trust them they will sell them only when you ask for your money back. These services vary in how secure they are, but no matter the security, you have to trust them to use them.
Crypto tumblers don’t hold your coins. Instead, they just send you a unique address to that you have to send your bitcoins and/or altcoins. The mixing service then gets your coins and sends you a single amount of cash.
Why should I mix my coins?
By design, a bitcoin blockchain is public – which means anyone can trace the transactions since the project’s launch in 2009. Its core feature for some might be a real privacy issue.
If anonymity is of your interest and you want an additional layer of privacy, you should consider using mixers. It’s easy to trace the source of your coins on an exchange. If someone knows which one you’re using, it’s possible (not easy) to trace it back to your real-world identity.
Cryptocurrency tumblers usually don’t hold any user data. This makes it very difficult for anyone to trace your coins back to you.
Are crypto mixers legal?
Yes and no. They’re legal as long as you don’t get caught using them to buy illegal goods. It’s against the law to use a bitcoin mixer to buy drugs, arms, or launder money. If law enforcement gets wind of your activity, they could get you for money laundering and/or illegal arms and/or drugs sales. That’s why it’s important to be careful and only use tumblers for legitimate purposes.
You should also remember that most countries have strict money transmitting laws. If a mixer is found to be facilitating illegal activity, it could get shut down.
Are bitcoin mixers safe?
They are no safer than the exchanges. You have to put some amount of trust in each transaction.
Are cryptocurrency mixers secure?
There have been numerous reports of tumblers being hacked and coins being stolen. One bitcoin mixer was even hacked twice in one week! It’s also important to remember that these services are often hosted in places with lax cryptocurrency laws. But, we can say exactly the same thing in regards to crypto exchanges.
Pros and Cons of Coin Mixers
Mixers are a convenient way to buy a large number of different cryptocurrencies (Bitcoin, Ethereum, Dogecoin, etc.) at once. This can be useful for new investors who don’t have time to research and understand each new altcoin they’re interested in buying.
On the other hand, they can also be very risky. Users aren’t guaranteed to get their coins back when they withdraw funds. There have even been reports of bitcoin mixers getting hacked. There’s also the risk that the mixer goes out of business or gets hacked, which means you’ll never get your coins back.
Additionally, withdrawals are often slow and costly. Some services also charge a hefty fee to withdraw funds from their system. These fees can increase as the amount you want to withdraw increases.
Final Thoughts on Bitcoin Mixers
Mixers can be a useful way to buy a large amount of different coins at once. They can be useful for new investors who don’t have time to research and understand each new altcoin they’re interested in buying.
