The news that Bitmixer.io, the Bitcoin mixing service website has been abruptly shut down, has been received with a mix of reactions.
The website, arguably the largest platform engaged in offering Bitcoin mixing services, has issued a statement through its operator that it is the reputation of the cryptocurrency that was on the line and Bitmixer.io did not want to be party to the general perception that Bitcoin is used only for unlawful transactions.
How Bitmixer.io Worked
It is well known that Bitcoin transactions are logged through the blockchain ledger, which is open for anyone to trace the deals publically.
This poses a threat to cryptocurrencies through blockchain—rather they’re for either illegal or innocent purposes.
Many Bitcoin buyers and sellers may feel that an amount of transparency leads to mischief-makers tracking their Bitcoin wealth and going after it.
But for those who are holding the digital currency to use in unscrupulous transactions, the fear is that investigative agencies would pick up the information and ultimately trace it back to their location—leading to unpleasant consequences for them.
To avoid such a scenario, these people reach Bitcoin mixing service sites like Bitmixer.io, which gives them the option to convert their Bitcoin wealth into a mixed currency basket and the other currencies are not traceable and their privacy is protected.
In more technical terms, the Bitcoin mixing service is a kind of barter.
Your Bitcoins are mixed up in a pool and assigned to another holder of a cryptocurrency basket on the site, while a third entity’s mixed holding would be assigned in your name.
All adjustments for equivalent values of the different currencies will be made, and you will have to have faith in the Bitcoin mixing service website to hold your asset in trust.
The “mixing” analogy helps illustrate this concept; “tumbling” is another piece of terminology used in the trade for this service.
As already mentioned, the purpose of availing this Bitcoin mixing service is purely privacy of data.
The Criminal Context
The opinion is split on what prompted the Bitcoin mixing site Bitmixer.io to close its operations.
Some firmly believe that the site came under pressure from the authorities, pointing to two relevant factors—one direct and the other indirect.
The statement issued by the site after shutting it down claims that their action would hold a mirror to their rival sites offering similar Bitcoin mixing services, that they might also close down their operations as they face legal uncertainty.
After such a statement was made, analysts were quick to make a connection between Bitmixer.io and the darknet market AlphaBay, which was recently shut down through the concerted efforts of law enforcement agencies in the United States, Canada and even Thailand.
It is being mentioned, in this context, that among the various reasons for which the U.S. Justice Department found the activities of AlphaBay illegitimate, the practice of Bitcoin mixing was also included.
Since the closing down of Bitmixer.io happened so soon after the AlphaBay incident, it can be assumed that Bitmixer was fearing action against it.
Other Sites Might Gain Customers
Though Bitmixer.io was the leading Bitcoin mixing service provider website, there are others offering the same service.
However, once the alert agencies and governments have identified this kind of activity as a convenient means of laundering ill-acquired wealth by criminals, then Bitcoin mixing services or any such route are likely to be shut down relatively soon.
This is indeed a paradox for many. Bitcoin has been in the ascendancy over the past few months and there is every likelihood of even governments acknowledging and approving the digital currency as an alternate mode of payment for products and services.
If this move by Bitmixer.io ends up cleaning up the system and Bitcoin transactions remain transparent and above board, it could prove to be a very welcome step.
But the actual results may take a few more weeks to surface.