Breaking chain, dropping tails: How to avoid de-anonymization when working with Bitcoin and other digital currencies.
In theory, the use of Bitcoin provides a property called unlinkability, which says that users transactions using one set of pseudonyms should not be linked to their transactions using a different set of pseudonyms. In practice, however, certain properties of Bitcoin usage erodes this anonymity.
How can de-anonymization become?
Basically, there are 2 strategies to reveal person identity:
- Web Analysis, which include researching online-data, internet-sessions logs, determination of IP-address and physical destination.
- Blockchain Analysis, which include automatic and manual taint of transactions history and associating them with web data and others relevant evidence.
Government law enforcement can disclose a person if its operations have passed through a “Hot” wallet or Crypto-Exchange. A first step to be safe — use physical Cold Wallet.
For who
For those, for whom Privacy is not an empty sound. Mixing is invented to protect persons from enforcement, taxes, hackers and ill-wishers. Coin mixing is crucial for anyone who linked with dark market activity, managing a big capital in cryptocurrencies, moving funds worldwide without official intermediates.
The privacy is really important. You pull that brick out and another and pretty soon the house falls. Timothy Donald Cook, Apple CEO
Properly mixing coins may seem like a daunting task to those who aren’t very familiar with it, but it is actually a simple process that will only take a few minutes of your time.
Interrupting digital-tails in 5 steps.
Since the Bitcoin blockchain is recording every transaction and it’s a public, it lets anyone track the flow of bitcoins in the network. Bitcoin mixing, also referred to as tumbling or laundering, is the process of breaking the connection between a Bitcoin address sending funds and the address(s) they are sent to. This also applies to other cryptocurrencies with pseudo-anonymity, such as Ethereum, Litecoin, etc.
Step #1: Create a new wallet over the TOR network. (Call it wallet #1).
Step #2: Send the amount you want to mix to previously created wallet #1.
Step #3: Create a few wallets, also over the Tor network. (wallet #2,3,4…). They will serve as the destination point for mixed bitcoins. How much you need? — 4 addresses for each 1 BTC mixing is okay.
Step #4: Turn off JavaScript before doing this step (because JS allow tracking your device). Go to the mixer website using TOR for maximum safety. Set up your transaction conditions:
- Add destination addresses created on Step #3.
- Choose mixing type relying on your security need. Research this Bitcointalk Thread to know about privacy levels.
You can choose bitmaximum.io for mixing bitcoin and other digital currencies ( TOR-link — bitmaximumgnmsaf.onion ). They also invite miners and referral partners for cooperation. If it’s you — let them know.
Step #5: Save the “Letter of Guarantee”. Check triple-time the correctness of all destination addresses. Send the coins from wallet #1, over Tor, to the address generated for you by the Mixer.
Within the specified time your addresses will get coins and your chain history will be broken off.
Step #7: You can use Blockchain.info’s Tor hidden service (blockchainbdgpzk.onion) to watch for your coins to arrive from the mixer. Once they have, restart Tor and then send the coins to your market address (or their eventual destination)!
