Most cryptocurrencies are not entirely anonymous. With the right tools, anyone can trace Bitcoins to specific wallets. Therefore, Bitcoin users who want to protect their privacy use Bitcoin tumblers to mix their coins, hopefully erasing their history.
What is Bitcoin tumbling?
Bitcoin tumbler is s service whose purpose is to improve the anonymity of Bitcoin by cutting links between individual Bitcoin transactions.
Simply put, Bitcoin tumbler breaks down your coins into many different pieces and mixes these pieces with other broken pieces from different clients. After using a Bitcoin tumbler, the link between your original Bitcoin and the shuffled Bitcoin gets erased.
As stated in our article on Bitcoin anonymity, let's say someone uses Bitcoin to commit a crime. Eventually, those coins end up in your hands. You received them legitimately and want to send them to a crypto exchange. To your shock, the exchange rejects your coins, telling you that they have been blacklisted. In the worst-case scenario, you might even have to turn your Bitcoins over to the authorities.
If you have had sent the Bitcoins to a Bitcoin tumbler first, the coins would no longer have any link to the original, "criminal" wallet address. The link would get broken, and your coins would hopefully remain safe.
There are several Bitcoin mixing protocols, such as CoinJoin, SharedCoin, or CoinSwap, which we detail in another article about Bitcoin mixers. For now, you just need to know that a typical Bitcoin mixing process comprises dozens of transactions. The more the transactions, the harder it is to track the coins back to you.
How to tumble Bitcoins?
Even though each Bitcoin tumbler has a slightly different user interface, a typical Bitcoin mixing workflow usually includes these steps:
- If the Bitcoin tumbler supports it, choose the mixing strength. The mixing strength determines how many transactions the Bitcoin tumbler does to shuffle your coins. Typically, the greater the mixing strength, the higher the service fee and the longer the time it takes to anonymize your coins.
- Provide the address of your "private" wallet. The "private" wallet is where the Bitcoin tumbler sends the mixed, anonymized coins.
- Provide the address of your "public" wallet. The "public" wallet is where the Bitcoin tumbler refunds the unmixed coins, in case something goes wrong and the Bitcoin mixing process cannot proceed.
- The Bitcoin tumbler asks you to send the funds to the deposit address. In this step, Bitcoin tumbler usually displays the Transaction ID. Make sure to write down the Transaction ID in case you'd ever need to contact the customer support, should your transaction get stuck. Some Bitcoin tumblers let you check the status of your transaction by entering the Transaction ID—a handy feature for the peace of mind.
- Send the coins to the deposit address. Once the tumbler receives your payment, the Bitcoin mixing process is initiated.
- You receive your shuffled coins back. Based on the Bitcoin tumbler, the coins will arrive in single or multiple transactions.
When using a Bitcoin tumbler, ideally, hide your IP address by using the Tor browser and an anonymous Bitcoin wallet. Even though Bitcoin tumblers usually don't keep the track record of transactions and their corresponding IP addresses, your IP may remain stored in a temporary log for debugging or troubleshooting purposes.
How long does it take to tumble Bitcoins?
The entire Bitcoin shuffling process can take from 30 minutes up to several hours, depending on various factors, including:
- how the Bitcoin tumbler works,
- what level of anonymity you want to achieve,
- how many Bitcoins you need to tumble.
Always review the tumbler's website and Terms of Service for more information on how the individual Bitcoin tumbler works and how their typical shuffling process lasts.
How much does Bitcoin tumbling cost?
Different Bitcoin tumblers charge different amounts, but you should be careful of anything that looks too good to be true.
While some Bitcoin tumblers charge a fixed service fee ranging from 1 to 5%, others take a random charge to make their transactions more difficult to trace. Even though it's not always a rule, the higher the service fee, the higher the Bitcoin anonymity you receive.
Along with the service fee, you should also add the transaction fee. Transaction fees vary depending on the amount of traffic on the blockchain network—something that's out of your control. Still, you should keep this fee in mind when using a Bitcoin tumbler.
Is Bitcoin tumbling safe?
Unfortunately, many Bitcoin tumbling services are not safe. Poor security, weak infrastructure, and lack of service are the most common issues facing Bitcoin tumbler users.
Building and maintaining a secure tumbling service is not an easy task, and Bitcoin tumblers often get compromised. Therefore, before using a Bitcoin tumbler, we always recommend you to do a preliminary check that includes the following steps:
- Check the SSL certificate. If you are using a Tor version of the site, you can skip this step. Make sure the site has a valid SSL certificate. The easiest way to do so is by using an online SSL checker, such as SSLshopper.com. If the tumbler's website has an invalid or missing SSL certificate, avoid it entirely.
- Perform a Google search. Google's search algorithm prioritizes review sites. Google the tumbler's site name to see if there are any negative reviews about the service you want to use. Additionally, Google checks the website for possible malware and warns you about a possibly infected site.
- Check social media. Check the tumbler's social media channels. Some Bitcoin tumblers use Twitter to post updates on their service. If the Bitcoin tumbler has such a channel, check when it was last updated. If the latest post was published three years ago, it might be a signal that something is not right.
- Research cryptocurrency forums. Checking out a popular crypto forum, such as Bitcointalk.org, is a smart move. You can search what other members of the crypto community say or ask about their experience with a specific Bitcoin tumbler.
- Compare service fees. Always compare the service fees before sending the Bitcoins. Bitcoin tumblers with enticing or confusing rates can be a trap. Ideally, stick to tumblers with fees from 2-5%.
Is Bitcoin tumbling legal?
The legal status of cryptocurrencies changes from country to country and is still undefined or transforming in many of them. However, as far as we know, there are no laws that explicitly ban Bitcoin tumbling.
Bitcoin tumbling as a way to protect your privacy and erase the history of your crypto assets is not explicitly illegal, and nor it should be. At least, it seems so.
However, even though no law prohibits Bitcoin tumbling, in 2019, Dutch Authorities in cooperation with Europol took down one of the largest Bitcoin tumbling service, Bestmixer. Europol stated that most of the Bitcoin, Bitcoin Cash, and Litecoin that moved through Bestmixer had a criminal origin or destination. During one year of its operation, Bestmixer tumbled an estimated amount of 27,000 Bitcoins or over $200M at that time.
There is no denying that Bitcoin tumblers have strong associations with illegal activities and cryptocurrency laundering services. However, according to the study conducted by Elliptic, only about 16% of the funds that passed through Bitcoin tumblers were from illegal sources. The remaining 84% used Bitcoin tumbling to increase privacy—mainly due to the public and transparent nature of Bitcoin's blockchain.
According to a Cryptocurrency Anti-Money Laundering Report conducted by CipherTrace, almost 97% of Bitcoin laundering happens on unregulated exchanges—not on Bitcoin tumblers.
Ignorance of the law is no excuse. Therefore, when it comes to using a Bitcoin tumbling service, it is your sole responsibility to comply with all applicable laws and regulations in your country.
Do I need to tumble Bitcoins?
If you are not an active Bitcoin user, then you don't need a Bitcoin tumbling service. However, if any of the below applies, you should seriously consider using a Bitcoin tumbler:
- You visit gambling sites. Many cryptocurrency exchanges, including Coinbase, do not accept coins from gambling sites anymore. Therefore, if you don't want to run into problems, you better tumble your Bitcoins before sending them to Coinbase.
- You use free marketplaces. There is a whole bunch of blockchain analytics companies that sell their crypto intelligence services to governments for blockchain surveillance and detection of criminal activity. Therefore, if you don't want authorities to knock on your door, we strongly advise you to use a Bitcoin tumbling service.
- You want more privacy from your Bitcoin. If you are an active supporter of freedom and privacy, then Bitcoin tumbler is a perfect tool for protecting your crypto assets.
The past and present ownership of every single Bitcoin is recorded in the public, fully transparent ledger known as the blockchain. With the growing number of regulations and tools that help authorities to control the observance of these regulations, more and more Bitcoin users prefer to keep their coins private.