Bitcoin mixing does not have the best of reputations. It is a method often associated with criminal activity and money laundering. A new report by Chainalysis puts an interesting spin on this particular business model. The majority of funds does not originate from stolen funds or darknet markets, by the look of things. A surprising turn of events, although it will not change the public perception of Bitcoin mixing just yet.
The Origin of Bitcoin Mixing Funds
The report by Chainalysis paints a very interesting picture as far as mixing Bitcoins is concerned. Although it is evident that this model will always be associated with money laundering, the ones potentially doing so are very different from what was originally assumed. Very little funds passing through these services comes from the darknet or ends up being stolen. Both “aspects” combined only represent 10.8% of all funds sent through mixers.
That is quite surprising, although it doesn’t necessarily make the origin of the funds more legitimate either. The money sent from unnamed services, mining pools, and gambling could still carry some sort of taint. It is of the utmost importance to further analyze that source of money to make sure nothing nefarious is going on. Especially the figures regarding gambling are pretty interesting, as most people assumed a lot of gambling proceeds would be laundered to remove any trace of origin.
What is rather remarkable is how just over 26.5% of all funds sent to mixers comes from other mixing services. It is always interesting to see how mixing services work. While most of them seem self-sufficient on the surface, there is a strong indication that a lot of them are interlinked in terms of removing taints from funds. In theory, this should not be too surprising either, as mixing funds through other mixing services will often yield the best results for all parties involved.
As part of this report, there are also some very interesting notes to take into account. The overwhelming majority of funds sent to Bitcoin mixers come from exchanges. This includes both p2p trading platforms and centralized exchanges alike. In fact, the centralized exchanges are most prominent with 40% of funds moving to a mixing service. It is unclear if this is done by the companies themselves or the users. Withdrawing funds from an exchange to a mixer could prove somewhat risky, as a user. One never knows if the funds would magically disappear, for a wide variety of reasons.
There are also crucial differences between centralized and “decentralized’ Bitcoin mixers. The centralized services continue to receive the majority of funds at all times, which is only to be expected. Their “decentralized” counterparts are only now starting to gain basic traction. That situation may come to change over time, assuming decentralization is something cryptocurrency users are effectively interested in. Despite the growing scrutiny by governments all over the world, it seems Bitcoin mixing services will not go away anytime soon.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.