A Closer Look at the Crypto Mixer
Crypto Mixer
While it’s hard to deny the democratizing benefits of cryptocurrency, it’s also clear that many of its users aren’t using this new technology for the reasons they’re originally touted. In fact, some use cases for crypto are downright illegal, such as money laundering or funding criminal enterprises.
This has prompted governments to take a closer look at these services. In particular, mixers are a target due to their potential for helping users launder cryptocurrency and hide the source of funds in their illicit activity.
Crypto mixers work by linking different addresses and transactions together. For instance, a user will deposit their bitcoin into the mixer’s pool and receive a combination of different Bitcoins to send to their recipient. This way, the recipient doesn’t see a link between their own transaction and the incoming bitcoin from the mixer.
Unlike decentralized mixers, custodial mixers require users to create an account with the service in order to deposit their cryptocurrency into their servers. This is a big drawback because it creates a single point of failure that can be compromised and reveal the user’s identity.
However, these centralized mixers do offer a more convenient solution. In exchange for a fee, users will be able to receive their bitcoin back within a certain amount of time after the mixer has finished its work. This offers a good balance between convenience and privacy as it still requires a user to create an account but reduces the risk of exposure by eliminating a single point of failure. Crypto Mixer