Peculiarities of proper storage and the principle of anonymous bitcoin transactions

The specifics of cryptocurrency transactions seem like a complicated science to many. However, most users associated with the field of digital money would like to count on the reliability and anonymity of the process. In order to make transactions in the Bitcoin system anonymously, it is recommended to use a specialized service Bitcoin Mixer. The anonymization service aims to make it much more difficult to track Bitcoin transactions. 

Predominantly bitcoin mixers use a basic technology where the maximum splitting of a client's funds takes place, after which the received parts are randomly combined with the shares of other clients.

To protect your coins, it's important not only to adhere to the principle of anonymization, but also to remember to clean up your coins. Read more about all of this further in this article.

How wallet owners get caught up with the scams

Peculiarities of proper storage and the principle of anonymous bitcoin transactions review

Buying Bitcoin is only 50% of success. The main task is to keep the coins purchased. The place to store digital currency is the blockchain, where coins are in the form of UTXO (Unspent Transaction Output).

Such an abstraction of digital money is analogous to banknotes.

If translated into digital currencies and shown visually, 1 BTC in a user's wallet can include an average of ten UTXOs of 0.1 BTC, two UTXOs of 0.5 BTC or any other combination of UTXOs.

New UTXOs are generated by the network when a user sends Bitcoins and represent the output of unspent transactions. In other words, it is the remainder of the cryptocurrency, the so-called "change" that is accrued to the user from each transaction. UTXO creation records are handled by so-called blockchain reviewers, which are also known as guides, monitors. Through these online resources (blokchain.com, etherscan.io, bloks.io and many others) you can get complete information on items such as

  • transaction (its status, number of confirmations, balance);
  • block;
  • address and other types of network statistics, which are important in practical application.

Data processing is done in automatic mode.

Based on the received data, a chain of transactions is built, i.e. the path that bitcoins have traveled.

UTXO is what attracts the attention of fraudsters: users have the data open, so it is possible to track the chain of transactions. Moreover, it is also possible to find out the personal data of the wallet owner. This method is in demand among scammers who use it to blackmail or steal Bitcoins. It is possible through social engineering.

About the simple bitcoin mixing method

Peculiarities of proper storage and the principle of anonymous bitcoin transactions news

BTC is considered confidential, but it retains information about past coin transfer transactions (recipient's details, address, etc.). In order to hide from scammers, when buying bitcoins and transferring them to other addresses, it is recommended to use the services of so-called Bitcoin "laundries".

Their role is assigned to Bitcoin mixers, which allow users' coins to be purified. This happens on the principle of UTXO blending technology, which leads to a break in the chain "sender-recipient" and, accordingly, hides the personal data of the participants of the process from the scammers.

In other words, digital coin laundries are a type of platform whose task is to hide traces of all kinds of transactions.

Mixers can take advantage of several coin blending modes, which have a number of differences based on the following criteria:

  • cost;
  • the duration of the bitcoin purification process;
  • the degree of protection from blockchain analysis.

Examples of bitcoin cleaning services: Blender io, Anonymix io, SmartMix , BitMix biz, Mixer Money, Bitcoin Laundry, Bitcoin Fog and others.

Consider the principle of work as an example of one of services.  It will be Mixer Money.

User pours a certain amount of coins on the server. The Mixer Money system crushes it and automatically distributes it to different wallets. In parallel, at the time of distribution, there is a mixing of coins that either belong to more than one owner, or with coins from the reserve of the platform itself. Receipt of already cleared coins occurs in the same form - in small "portions" to the wallet. 

Resources do not require registration. All logs are deleted immediately after purging (if the order is not used, the logs are deleted on the sixth day).

Starts the process of data encryption. 

Coins are cleared automatically. The result can be obtained in 48 hours.

Such a procedure leads to the complication of the blockchain analysis process.

This server differs from analogues by the number of mixing modes. There are two of them presented here.

Purification of BTC occurs through foreign cryptocurrency exchanges.

Guarantees with PGP signatures are applied in the process. 

The deposit amount must be in the range of 0.001 - 50 BTC.

The time of the mixing procedure is no more than 6 hours. The time can take up to two days. It depends on the type of service chosen.

To date, BTC Mixer Money service is considered the most popular because of its characteristics.

A simplified description of the three steps of a simple purification:

  1. Mixer accepts bitcoins that belong to clients. 
  2. The mixer forms new UTXOs. 
  3. The client receives random UTXOs.

About the method of complex bitcoin mixing

From major exchanges, Mixer Money service transfers purified Bitcoins to the user's wallet in "Full Anonymity" mode. In order to improve the mixing process, the transfer is not made to one, but distributed to two addresses. The same principle is used in the "Exact Payment" mode. The service randomly chooses the time of the transaction, as well as the ratio of amounts in the transfer. This is done to complicate the tracking of analytics services:

  • clustering 

Tracking UTXO from different addresses, but which were distributed in one transaction (cluster). It is possible that transactions with different UTXOs are signed by the same owner. 

The task of analytical services is to check the addresses from the cluster, to find the transaction sent from a verified crypto-exchange account. This is necessary to establish the identity of the owner of the main wallet.

  • taint

The task of the service of this type of analytics is to check addresses, connected by chains of transactions. Simple mixing can't protect from such analysis. As a result of complex purging, the sender-recipient link of bitcoins will be hidden for the analytics service, i.e. it will become impossible for the service to establish it.

How the coin clearing fee in "Full Anonymity" mode is determined 

The fee is divided into two parts:

  • transaction fees (0.0007 BTC);
  • mixer services (4-5% of the transaction amount). 

The service automatically, by random selection, specifies the percentage from the set range. This is done to create a more complex analysis for similar volumes.

Risks of using Bitcoin mixers

There is a risk that users will get their own coins because mixers often mix UTXO in a premixer. After processing in Mixer Money's "Full Anonymity" and "Exact Payment" modes, users receive "pure" bitcoins verified on exchanges. 

Of the disadvantages, we can note the low speed of bitcoin mixers. 

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To summarize

Bitcoin holders keep transactions anonymous (they can keep their main address secret) thanks to Mixer Money, not being afraid of fraudsters when withdrawing, receiving or transferring coins.

In this case, the user does not need to get into technical details of such services: he simply enters the address where Bitcoins should be sent.

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