Privacy is a key feature of blockchain technology and various projects offer different approaches to secure transaction details and maintain privacy. One such way is a coin mixer. In this article, we're going to understand the concept of a Mixer.

What is a Mixer?

A mixer is a service that makes cryptocurrency transactions more anonymous and difficult to track. Numerous streams of potentially recognizable cryptocurrency are mixed together to increase the complexity to track the owner of the funds.

Taking a Bitcoin user as an example. A user holding Bitcoin sends some BTC transaction to a mixing service, which mixes it’s transaction with that of other users, and transfers the funds to the receiver's address. This means that there is no link between the original transaction and that the end receiver’s address. The transaction amounts may be chosen at random so that the transaction consists of many small partial payments spread over a longer period of time. A fee of 0.25 - 3 percent is typically charged by a mixing service.

How does a Mixer work?

Coin mixers basically take your cryptocurrency, mix it with a gigantic pile of other cryptocurrencies, and return smaller units of cryptocurrency to your preferred address. The Coin Mixer normally takes 1-3 percent as a profit.

If you want to use a coin mixer, you need to submit cryptocurrencies to the business. They won't have enough to combine otherwise. However you need to guarantee that you give it to a reliable coin mixing firm since you are contributing some of the money to the service to be combined. If not, you might be robbed of your earnings.

There are a number of projects that provide facilities for coin mixing. Tornado mixer is one of the most popular mixers. In the United States, coin mixing is completely legal for the moment. The lawfulness of coin mixing, though, differs across the globe, as does the lawfulness of cryptocurrencies themselves.

Why do we need a Mixer?

One of the frequently asked questions is if blockchain transactions are anonymous then who would need a mixer? Well, the need for a mixer is for highly end users who would want to be discreet about their transaction.

Potential Use Cases

Increased anonymity - This helps deter hackers from being attacked. You could do much to protect your security and make you more anonymous, if you are someone who frequently puts transactions in cryptocurrency in huge amounts. This increases privacy.

There are potential downside of the mixer as well. Money laundering and covering of activities by criminals with use of cryptocurrency may increase. This will make it harder for law enforcement officials to identify them. However as adoption is increasing, law enforcement agencies are looking for ways to monitor criminal activities using cryptocurrencies.

Coin mixing is generally difficult to trust for many because it is so new. BitMixerio has just closed without notice.

The coin mixers appear to charge 1-3 percent fees, as already stated. This might not be so awkward with small purchases. However these payments will translate into thousands of dollars for bigger deals, say $100,000+ . It’s expensive but some people find it’s worthy and that’s why many coin mixers are now working.

Different Mixers available for Ethereum

By default, the whole history and balance of your Ethereum transactions is public. You can access all transactions on block explorers like Etherscan, and someone who knows you have a particular address can quickly see your transfers, identify the origins of your money, measure your assets and evaluate your online activities. Yet no one wishes to see his/her transaction history and balance in public. Ethereum is not private by nature. Everyone can see where the Ether is coming from or heading to. The trick is to cover the address that belongs to you. That's exactly what mixers are here for. They will break the connection between addresses for you.

Tornado Cash

A non-custodial Ethereum and ERC20 privacy solution based on zkSNARKs is Tornado Cash. By breaking the on-chain connection between receiver and sender's addresses, it increases transaction safety. It uses a smart contract that takes deposits in ETH, which can be withdrawn from another address. There is no way to connect the withdrawal to the deposit. ETH is moved from one address to a new address, guaranteeing full privacy.

Features

• Improves transaction anonymity by breaking the on-chain connection between recipient and destination addresses. It uses a smart contract that takes deposits from ETH, which can be withdrawn from another address. There is no way to connect the withdrawal to the deposit whenever ETH is removed from the new address, guaranteeing full privacy.
• It serves as a proxy to ensure that the transaction with zkSnarks data is 100 percent anonymous.
• Main motto is “code is law”.

Ethereum-based mixer worth Tornado Cash's privacy pool recorded an all-time high, hitting over $13 million on November 11, according to data collected by The Block. The non-custodial privacy service has risen almost 7,700 per cent year-to-date from $174,000 to $13.44 million.

Advantages

• It helps us to recover anonymity.
• It can be used to send Ether to any address, so that your send address is obscured. It uses zero-knowledge proof.
• We can use this app to deposit any ETH into a smart contract without having disclosed an original address and then quickly produce evidence that you had performed such a deposit.

Disadvantages

Not Completely Decentralized
Looking at Tornado.cash smart contracts, we can see evidence again that truly decentralized applications are difficult to develop. Although we have little doubt that the team has the best intentions, designing systems that are protected from their own developers is a daunting task and can have an impact on even the slightest issue. The introduction of a new contract allows the contract operator to stop all withdrawals from the mixer. The direct result of this issue is that the Tornado.cash team or any future mixer operator will freeze all funds currently in the mixer. While the team has no intention of using this bug to their advantage, and the team was very vocal that the contracts are still being reviewed.

Eth-mixer

Ethereum (ETH) Mixer is a quick service that will improve your anonymity when using Ethereum and performing Ether transactions. An individual has his or her right to personal privacy even while selling, trading or contributing Ether. We are not anonymous by using ETH and here comes the Ethereum Mixing Service to help you break all the ties between your old and fresh mixed ETH coins. Using an ETH mixer makes it almost difficult to track the current Ethereum address.

Features

• After receiving our Ether, they will send you a premixed Ether from their reserve to our new address. In their reserve, our old Ether will be added. We will receive a mixing code for your first order. It's important to write this code down for the next time using their service so you won't get your old Ether back.
• ETH Tumbler charges random commission 2-5 percent on a single mix to have the best anonymity for Ether transactions.
• The Ethereum mixing service is entirely automated and operates without human assistance. When the mixing process is complete, the machine simply removes all the associated data.
• Service doesn't keep any logs so they can't support user behavior queries. This is done for the optimization of device storage and privacy of users.

Summary

A cryptocurrency transaction if followed may lead back to the minting. As it eliminates counterfeiting, it may also reveal the owner if a particular wallet is connected to a specific individual. This chain of "continuity" may trace back to sender and receiver. This greatly undermines the key feature of cryptocurrencies' declared anonymity in general. Network transfers are readily traceable, but public keys are not attached to the records of their users. The point at which a token can turn from anonymity to identity is when a user uses a wallet or an exchange with KYC. However in a blockchain there are many ways to safeguard privacy. One such way is a coin mixer. To enhance privacy in a blockchain, one popular way is using a coin mixer.