What Is A Crypto Mixer?


✍️ 13 October, 2022 - 11:19 👤 Editor: Jakub Motyka

  • In the wake of the Tornado Cash sanctions, the idea of ​​crypto mixers has strayed from its raison d'être.
  • Advocates of the privacy think that cryptocurrency mixers like the Bitcoin mixer or Ethereum mixer are necessary to protect anonymity.
  • What is this all about? Here we tell you more.

After the sanctions issued by the Department of the Treasury to Tornado Cash, many wonder about the legitimacy of crypto mixers. Cryptocurrency mixers, like Bitcoin mixers or Ethereum mixers, are applications in charge of providing privacy to their users, within a totally transparent ecosystem, such as the blockchain.

Through the use of crypto mixers, it is possible to send and receive funds without establishing a direct link between the senders and receivers. It is ideal for users who want to keep their private wallets away from prying eyes. However, this tool has been commonly used for money laundering, as was the case with the famous Axie Infinity Ronin Bridge hack. On that occasion, a considerable part of the funds was sent to Tornado Cash, and then to wallets linked to the attacking group, Lazarus.

How Do Crypto Mixers Work?

Most cryptocurrency mixers, such as Tornado Cash, are based on smart contracts to receive and distribute the tokens. In this way, the issuer deposits its coins in a pool of liquidity and the smart contract will take care of getting the correct amount to the receiving wallet. However, all the tokens are pooled within the pool, making it difficult to track them once delivered.

The mixing process can vary between different crypto mixers, but for the most part, they are based on zero-knowledge smart contracts. In other words, the procedures cannot be controlled by third parties and are carried out automatically by a program. This makes the service totally neutral and difficult to control by specialized organizations or companies. For this reason, it has become the favorite tool of cyber-criminals.

What Legitimate Uses Can Cryptocurrency Mixers Have?

Cryptocurrency mixers are the perfect tool for making anonymous donations. Some internet celebrities often do it, as is the case with Vitalik Buterin, co-founder of Ethereum. On this, Lia Holland, Director of Campaigns and Communications at Fight for the Future, believes that hackers and cyber-criminals must be stopped. “But not in a way that compromises human rights and the first amendment” referring to blockchain privacy.

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