Part 4: The Ultimate Bitcoin Privacy Guide

Part 4: The Ultimate Bitcoin Privacy Guide

Welcome back to Part 4 of “The Ultimate Bitcoin Privacy Guide“: How to keep your Bitcoin and Cryptocurrencies safe from hackers.  Click here to read Part 1, Part 2 and Part 3.

👏👏👏Thanks for being a loyal fan of this blog, now, lets dive into PART 4👇.

Mixing Bitcoin

The idea behind mixing Bitcoin is to confuse the trail of transactions. This is important if you value privacy, since the Bitcoin blockchain is a public ledger that records all transactions.

The mixing process divides your funds into smaller parts and mixes them with random small parts of other people’s Bitcoin funds. You end up with completely new coins. This helps to break any link between you and the coins you purchased.

Mixing Bitcoin is particularly useful if you’ve openly purchased your Bitcoin, meaning that someone could easily trace your transactions back to your real identity. If you’ve already taken steps to purchase the Bitcoin privately, mixing might be overkill. It will, however, help further anonymize your Bitcoin payments.

It is worth noting that properly mixing Bitcoin will help protect you not just now, but also if future tools and techniques can trace historic Bitcoin transactions.

Bitcoin Blender

The best beginners guide to the complex issue of Bitcoin mixing that I know of is published by Bitcoin Blender (but is not specific to that service).

Key points about Bitcoin mixing are summarized below. However, I strongly recommend you read through the Bitcoin Blender document, as it goes into much more detail on this highly specialized subject than what is within the scope of this general guide.

Bitcoin Mixers

In order to mix Bitcoin, you need a Bitcoin mixer service (also known as a Bitcoin tumbler). DIY methods of mixing Bitcoins do exist using websites such LocalBitcoins.com. This is not recommended, however, as it does not really remove the taint and it may require trusting websites that are subject to legal warrants for information.

Using CoinJoin can help improve anonymity when DIY mixing, but should only be considered if you really know what you are doing when it comes to Bitcoin and blockchain analysis.

Bitcoin mixers are centralized services that keep large reserves of clean Bitcoin. For a service fee, they allow you to swap your Bitcoin for clean Bitcoin.

Bitcoin mixers come in two basic flavors – Tor mixers and clearweb (regular internet) mixers.

Tor Mixers

Tor mixers exist only on Tor Hidden Services (aka the dark web), and are therefore the best option for maximum anonymity.

On the downside, the operators of these services are themselves anonymous. This means that there is nothing to prevent them disappearing with your coins! In addition to this, Tor mixers are particularly vulnerable to phishing scams (see below).

Established Tor mixers with a strong reputation within the Bitcoin community include:

  • Bitcoin Blender
  • Grams Helix

When using a Tor mixer you should always disable JavaScript in the Tor Browser.

Bitcoin Javascript

Clearweb Mixers

Clearweb mixers exist on the normal internet. Most of them are legally registered companies. This means that they can be subpoenaed for transaction information. However, many such services promise to keep no logs or personal information.

Many clearweb mixers use CloudFlare. This is great for protecting their websites from Distributed Denial of Service (DDoS) attacks, but carries potential privacy risks. One such risk is often the requirement to enable JavaScript in order compete Captchas.

The main advantage of clearweb mixers is that they are much less likely to just abscond with your money (although nothing can be 100% guaranteed). Their use of regular HTTPS certificates also makes it much less likely that you will become the victim of a phishing scam.

READ  Watch "Amazing Interview With A Crypto Newbie!" on YouTube

You can, of course, connect to clearweb mixers using the Tor Browser or a VPN to hide your IP address from the mixer. This is will improve your privacy, but is not as anonymous using a Tor mixer. The advice issued by LocalBitcoins.com about the dangers of transferring Bitcoin funds over Tor also holds true here.

Beware Phishing

The internet is flooded with fake links to Bitcoin mixer sites. Even popular, high profile websites can carry fake phishing links.

Most clearweb mixer sites use HTTPS. If the domain names looks legit and the website has a valid HTTPS certificate (look for a closed padlock in the URL bar), then the site is almost certainly genuine.

The same cannot be said for Tor mixer sites, which don’t have clearly recognizable domain names or use HTTPS certificates. Indeed, some phishing websites look very convincing, so that even users familiar with the genuine website might be fooled.

To the best of my knowledge, the links provided in this article are genuine, but I take no responsibility for them. Please do your own research before trusting any website with your Bitcoin.

Bitcoin Mixer Aunonymization Features

Even when mixing Bitcoin, a determined adversary may be able to use blockchain analysis techniques (similar in principle to traffic correlation) to trace the Bitcoin trail. In order to counter this threat, mixers often offer some or all of the following obfuscation features:

  • Randomized Service Fee – because a fixed service fee on the blockchain may provide a clue as to which mixer service was used.
  • Randomized Delay – this makes it difficult to tie together transactions entering and exiting your wallet.
  • Multiple Withdrawals – this allows you receive the mixed coins using multiple transactions and multiple wallets in order to hide the transaction.

For maximum anonymity, you should take advantage of all such available features.

Taint Analysis

When mixing Bitcoin, “taint” is the connection between your old coins and the new ones. 0% taint = no connection at all.

In the past, Blockchain.info offered a free “taint analysis” tool that allowed you to manually check for taint. It has shut this tool down, however, and at the time of writing, no real alternative exists.

My Experience

I opted to use popular Tor mixer Helix by Grams, which offers the following features:

  • Standard service fee (2.5%)
  • Customizable delay (optional, up to 24 hours)
  • Multiple address withdrawals (optional)
  • Optional 2FA (two-factor authentication)

The service fee is not random, but I can live with that. More important for the purpose of this guide, is that trades require a fairly low minimum of 0.01 BTC (as it was, I had to top the funds in my wallet up a little for this step).

You can register for an account, but I opted for the Helix Light (quick mix) option.

  1. Create a new Bitcoin wallet, to which the newly mixed, untainted Bitcoin will be sent. Let’s call this mixer wallet #3. I will be mixing funds stashed in wallet #2 that I created earlier.
  2. Grams Helix is a Tor mixer, and is therefore only available via the Tor Hidden Services network. Thus I fire up the Tor Browser and visit (http://grams7enufi7jmdl.onion/helix).
  3. In the Helix Light tab, just enter the Bitcoin Wallet addresses that you would like the coins sent to (mixer wallet #3, in my case). You can have the coins sent up to five addressees to help obfuscate the transaction.Helix
  4. You are then provided a Bitcoin wallet address to send your “dirty” coins to. I sent these from wallet #2.Helix LightHelix also provides a PGP key that verifies the receiving wallet it created for this transaction. Save this key in case there are any problems and you need to prove the transaction occurred. I simply pasted the PGP key text into a text file on my computer. Once the transaction is successfully completed, this can be safely deleted.
  5. Refresh the webpage to see confirmation that the payment has been received (you may need to wait a few minutes for this). You can then increase anonymity by adding a random delay (1-6 hours) and/or send to multiple wallets. Both these options are recommended.
READ  Happy Xmas from all of us at 9jaCashFlow + Free Tips

Helix

Refresh or bookmark and revisit this web page for final confirmation when the transaction is completed. You should now see the mixed Bitcoin in your wallet (mixer wallet #3 for me).

Once you have verified that the Bitcoin is in your wallet, hit the “Remove Helix” button to erase all record of the deal from the Helix servers. Then transfer the funds away from the wallet into which you received the mixed funds, into yet another wallet. Just to be sure.

I would then check the mixed Bitcoin for taint, but there currently appears to be no way of doing this. Regardless, the Bitcoin should be well mixed by now.

Using Bitcoin To Buy A VPN Anonymously

Now that you have some highly anonymous Bitcoin, it’s time to spend it! As this is BestVPN.com, you can use it buy a VPN subscription, but the process is similar whatever you buy.

If you’re buying a VPN subscription, please remember that although payment may be anonymous, the VPN provider will always know your real IP address. You are therefore never truly anonymous.

The one exception to this rule is if you use VPN through Tor combined with an anonymous payment method such as properly mixed Bitcoin.

This can allow for true anonymity when using a VPN because the Tor network hides your IP from the VPN provider. AirVPN is the only VPN service I know of to support this feature, however.

Note that the process for paying with Bitcoin varies quite considerably from provider to provider. I have chosen to use Mullvad for this example.

  1. Register for a new account or sign in to an existing one. On the My Account page, select the Bitcoin tab, choose how long you want to pay for, and hit the “Request payment info” button.Mullvad
  2. Mullvad will generate a one-use wallet. Send the money to the address given.Mullvad
  3. Once the Bitcoin payment has received at least one confirmation, your account will be credited with the time purchased. Enjoy!

 

Bitcoin Privacy Recap

Bitcoin is not inherently anonymous. Far from it, in fact. With some effort, however, it can be made highly anonymous (there is no such thing as 100% guaranteed anonymity). In my experience, buying and mixing Bitcoins was a painless process, but it does require some work. Is it worth the effort? Only you can decide that.

Finally, we’ve got to the end of this article. 👏👏👏Thanks for reading. If you have any questions, don’t hesitate to put it down in the comment box below👇👇👇.

Article Source: BestVPN.com

Share this post

Comment (1)

Leave a Reply

Your email address will not be published.