One of the pillars of Bitcoin’s popularity is also one of its biggest misconceptions and that is anonymity. It is true that Bitcoin is more difficult to trace than other types of transactions but it is not truly anonymous. Because of this, bitcoin users are continuously searching for new and better ways to anonymize their transactions.
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Bitcoin Mixers and Tumblers
Traditional bitcoin mixers and tumblers combine your bitcoins along with many other people’s bitcoins and the mixer’s own reserves as well. Then they send the equivalent of your original deposit in someone else’s bitcoins to the BTC address you specify.
The problem with this method is that because all of the transactions are bitcoin transactions, they are all recorded on the blockchain and are therefore traceable. There is also an added risk that if the bitcoins you receive were used for something illegal, that can, in theory, be traced back to you as well.
What is ChipMixer?
ChipMixer is different than any other bitcoin mixer that has come before it. Instead of simply combining your bitcoins with those of other users, they have developed a chip-based system that ensures a much greater degree of privacy. Here’s how it works:
When a user deposits bitcoin they receive the equivalent in chips. Each chip has a pre-determined value that is backed by Bitcoin addresses that have already been set up and pre-funded by ChipMixer. There are chips worth .001 BTC, .002 BTC, .004 BTC, etc… all the way up to 4.096 BTC.
If you were to deposit 0.1 BTC, for example, you would receive three chips worth 0.064, 0.032, and 0.004 BTC respectively. Since those chips were already pre-funded before your deposit, there is no link between them and your deposit on the blockchain. That is the first step in securing your privacy.
Once you have received your chips there are several things you can do that will further increase your anonymity:
1. Split Your Chips
By splitting a chip you create two chips each with half the value of the original chip. One 0.032 BTC chip would become two 0.016 BTC chips, for example. Any chip can be split except for the lowest denomination which is 0.001 BTC.
2. Merge Your Chips
The opposite of splitting, merging takes two chips of identical values and combines them into one chip with twice the value of either original chip. For example, merging two 0.032 BTC chips would result in one chip worth 0.064 BTC. It is important to note that only chips of identical value can be merged in this way.
3. Bet Your Chips
Betting adds a completely random element to the mixing process that helps obfuscate your bitcoins even further. You can choose to bet a chip for double or nothing. That means that either you win and you receive twice the chip’s original value or you lose and you get nothing.
4. Donate Your Chips
Donating a chip transfers it to ChipMixer’s own account. Since they don’t take any fees or commissions for the service they provide, the donations are always welcome. You can donate any chip amount you choose except for those that are 1 bitcoin and higher. Using the initial deposit example from above, you could choose to donate the smallest chip denomination you have (which in this case would be 0.004 BTC) or split it and donate as much as you want.
5. Withdraw Your Chips
The whole point of mixing your bitcoins is to get them back again so when you are ready to withdraw, your chips are removed from your list and you are issued a private key for each chip with an address containing its value in bitcoin.
Chip withdrawals are not visible on the blockchain and since the chips are pre-funded they can often appear to have been created days before your deposit was made. This adds yet another layer of privacy to your bitcoin transactions.
What do you think of ChipMixer? How does it compare to other bitcoin mixers? Let us know in the comments below.
Images courtesy of ChipMixer, AdobeStockShow comments