The mechanics of cryptographic mixers: how they work
Cryptocurrencies, such as Bitcoin and Ethereum, have been in the holders in recent years due to their rapid growth and increased adoption. However, an aspect of the cryptocurrency ecosystem that has caused a significant interest is the use of cryptographic mixers. These decentralized services allow users to anonymously mix their cryptocurrencies with the funds of other users, which makes it impossible for anyone to track transactions to individual wallets or addresses.
In this article, we will deepen the mechanics of cryptographic mixers and how they work, as well as explore their benefits and inconveniences.
What is an encryption mixer?
A cryptographic mixer, also known as glass or cryptocurrency washer, is a service that allows users to transfer anonymously to cryptocurrencies between multiple wallets. The process involves mixing coins with the funds of other users, essentially creating a new and separate wallet with mixed funds.
Here is a general description of how it works:
- The user sends application : A user initiates a request to mix their cryptocurrency funds with the funds of another user.
- The mixing service accepts the rates : both parties agree the mixture rates and the terms of the transaction, including the minimum amount required for a successful mixture and the maximum allowed by transaction.
- The transaction is created
: The mixing service creates two new transactions: one from the original user wallet to the mixer wallet, and another from the mixer wallet to the recipient’s wallet. These transactions are completely separated from each other and cannot be linked to anyone.
- The coins are mixed : the coins are mixed in a way that makes it impossible to track their original property. This is achieved through complex algorithms and techniques, such as the use of multiple directions, encrypting data and mixing coins with other cryptocurrencies or fiduciary currencies.
- The wallets receive funds : both parties receive their respective funds from the mixture.
How cryptographic mixers work
Several factors contribute to the safety of cryptographic mixers:
- Encryption : The data is encrypted on both sides of the transaction to prevent someone from accessing the information of the original owner’s wallet.
- Multiple addresses : The mixture of services often uses multiple addresses, which makes it difficult to track wallets or individual owners.
- Algorithmic mix : Some services use advanced algorithms that mix coins with other cryptocurrencies or fiduciary currencies in a way that makes it difficult to identify the origin of the funds.
- Randomization : The mixing process implies randomizing transactions and currencies that are mixed, even more dark ties between them.
Benefits of encryption mixers
While cryptographic mixers offer several benefits, which include:
- Anonymity : They allow users to remain in anonymity when transferring cryptocurrencies, which makes it difficult for agencies to apply the law or malicious actors to continue their activities.
- Security
: When mixing coins with other funds, the risk of a single transaction to an individual wallet is significantly reduced.
- Decentralization : encryption mixers operate in a decentralized network, allowing users to choose any mixer and not be linked to a specific service.
Disadvantages and concerns
However, encryption mixers also have some inconveniences:
- Regulatory uncertainty : The regulatory panorama for cryptographic mixers is not yet clear, which raises concerns about compliance with regulations against money laundering (AML).
- Limited use cases : While cryptographic mixers offer security benefits, they are not suitable for all cases of use. For example, users may need to transfer large sums of money through borders without the ability to track transactions in real time.
3.