A bitcoin tumbler is software or a service that mixes, scrambles or otherwise alters the link between the sender and recipient of your Bitcoin transactions. They are also called “Bitcoin mixers”. Tumbling is essential for anyone who wants to keep their crypto portfolio anonymous or protect their financial privacy.
The nature of the blockchain makes it easy for others to see your transaction history and potentially link that to your real-life identity. This has made many people concerned about their financial security and privacy. That’s why some of them are turning to a bitcoin tumbler.
While cryptocurrency exchanges and platforms require you to submit personal documents to prove your identity, a bitcoin tumbler can make it impossible for authorities to trace specific transactions. This is because it breaks the connection between wallets and their locations, making it harder to find out the origin of a specific coin.
There are two main types of tumblers: centralized and decentralized. Centralized bitcoin mixers require you to send your coins to them and pay a service fee for the tumbling process. Then, they will mix your coins with the bitcoins of other users and send them to their destination addresses. Decentralized tumblers work automatically and are carried out by protocols such as CoinJoin and Samourai Wallet.
While a bitcoin tumbler can be used for legitimate purposes, it’s often associated with money laundering and other illegal activities. In 2021, the founder of one popular tumbler, Bitcoin Fog, was arrested for helping darknet market criminals launder around $300 million. New anti-money laundering rules are also making it more difficult for bitcoin tumblers to operate without attracting unwanted attention.