Traditional Bitcoin Mixers

There is a disconnect between privacy researchers and privacy implementers. For a few years now, the mission of my life was to close this gap and now I am in the finish line with Wasabi Wallet. And, if I am successful, this will be my last chance to write about this light and unchallenging, yet important topic.
The only Bitcoin anonymity techniques those came out of research and made their way to the Bitcoin main network are JoinMarket and Wasabi Wallet, however they did not gain much traction, compared to their centralized alternatives. Most users, in fact use centralized Bitcoin mixers to regain their privacy. This blog post is about them.

Thinking about it, isn’t it ironic that, over the past years I wrote about every Bitcoin privacy technique in existence, except the one that 99% of all users use?

Issue 1: They Steal Your Coins

Issue 2: You have no privacy against them

This is the reason why researchers, like me are not talking about them at all. Every anonymity technique starts with a trustless architecture. No compromise here.

Issue 3: Mixing Unequal Inputs (The Wrong Way)

If you send 3.29372 Bitcoin to a mixer and receive 3.29372 Bitcoin from the mixer, then the flow of the coins is trivial.

While some of these mixers do some obfuscation regarding this issue, these attempts are weak. I have only seen one mixer so far that sufficiently addressed it, which is called ChipMixer. It is not an endorsement, I don’t know if they are even legit.

Wasabi/ZeroLink/TumbleBit/JoinMarket/CoinShuffle are all using equal outputs so the result of the mix is a pure, undeniable mix.
This of course comes with some usability issues, which only Confidential Transactions could solve perfectly. Considering that, this technology making itself into Bitcoin is lightyears away, I came up with Unequal Input Mixing, that provides significant improvements in a number of ways and can be implemented today. Unfortunately I am occupied by the release of Wasabi, so this work is a little more down the road, I didn’t even had the time to popularize this idea yet, however you should rightfully be excited about it. If you are interested, I would love to see some research on it.

Issue 4: Network Analysis

With that in mind, what we must notice is that most traditional Bitcoin mixer users fail against network analysis before and after the mix. Therefore it doesn’t matter if you are doing it properly and you use a full node, you are the only one who does that, thus you will be deanonymized, too.

This is the reason why I had to build a fully functioning Bitcoin wallet: HiddenWallet, and later Wasabi Wallet, instead of just throwing some mixing code to a website.

Thought For Food

However, since coin loss, and other issues are architecturally impossible with Wasabi, our target user is not limited to them, the target user of Wasabi Wallet is everyone, because everyone needs privacy.

Conclusion

When we encounter a Bitcoin mixer, our algorithm does not work anymore. In this case we have to manually look at the graphs to make sense of the flow of coins.

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