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A Bitcoin Laundry or Mixing Service is a service that accepts BTC payments, and returns the same BTC amount, only from coins that are unassociated to the original BTC. It is a privacy service that works well if it has massive usage.

What are some good mixing services? Is there any data on how well they actually anonymize (e.g. what size are their "stashes" or user base (bigger stash = bigger anonymity)?

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A large part of the confusion surrounding mixers is simply a mixture of poor grammar and terminology. As was shown to me in this question there is no distinct recognizable item corresponding to a "bitcoin" the way there is corresponding to, say, a dollar. It might be better to say that mixers disguise the transaction chain leading to your account by passing through one or more intermediaries. There is no such thing as a "dirty" coin, just data that can be tracked back to "dirty" sources – David Perry♦ Oct 11 '11 at 14:26
It doesn't disguise by adding layers like a Tor node does. Rather, you give it "dirty coins", it gives you "clean coins" - coins that someone else gave it, that have absolutely nothing to do with your coins (they might be accidentally dirty from some other source, but they are not dirty from anything you did with them). – ripper234 Oct 11 '11 at 14:42
Again, it doesn't "give you" coins because coins don't exist. You give it a transaction history that leads back to source A and it gives you back the same balance but with a transaction history leading back to point N. Unfortunately once the history with source A is associated with you in any identifiable way it is indelibly associated with you forever. This is an important distinction that anyone looking to protect their privacy needs to make. Such washers can only hide the fact that the controller of address A also owns address B. – David Perry♦ Oct 11 '11 at 14:51
The main thrust of my point being that people imagine "coins" as distinct objects which are transient. They imagine that "as long as I'm not holding the 'dirty' coins I'm ok" when they're not. There are no coins, only transaction histories which determine balances, and transaction histories are forever. If you take payments for something illegal or embarrassing on address A and have them "mixed" and sent to address B, you still have to worry about address A being burned. – David Perry♦ Oct 11 '11 at 14:53
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@DavidSchwartz - Mt Gox could be looked at as a 'mixer' of sorts but they don't provide any "service level agreement". Looking at my transactions some rapid round trips through Mt. Gox are very obfuscated others however appear to be put into infrequently used accounts and it may be possible w/ sufficient block chain analysis to identify/track the funds. A superior mixing service would be one that mixes large amounts of transactions through multiple iterations and in/out addresses involving random periods of time. Of course as you point out trust is a major issue. – DeathAndTaxes Oct 12 '11 at 2:05
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The only one I'm currently aware of is "Bitcoin Laundry" operated by Mike Gogulski. They charge a 4.555% commission rate and do little more than accept a payment then re-send a payment. There is also (according to the Wiki) that the service is only lightly used and might not be adequate to provide any real anonymity. You might be better sending then withdrawing coins at Mt Gox with a decent delay between transactions - the sheer volume of Mt Gox's transactions as well as the size of their wallet would make them much more effective and there's nothing I'm aware of to stop you from creating an account with a throwaway email address and accessing Mt Gox through TOR/I2P/etc.

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Looking at the Bitcoin Laundry it does seem to be poorly implemented. A good laundry should have sufficient transaction volume possibly even paying other entities to provide entropy by including transactions they don't need "washed". It also at least according to the website doesn't do any transaction splitting (i.e. 500 BTC in via one transactions and 500 BTC over a period of 18 transactions spanning 3 days with balances between 12.02 and 278.45) which would appear to provide nothing more than "feel good" obfuscation. – DeathAndTaxes Oct 12 '11 at 2:08
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Blockchain.info has recently started up a dedicated mixing service.

Send Anonymously with Blockchain

As they were offering bonus payouts at the start I sent money via the service and it was quickly forwarded to the correct account.

To confirm how they mix the coins and the amount of taint remaining you can check the source code on github.

Source code

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The blockchain-based betting services could essentially be used as a mixing service, where the makeup of a wallet is significantly different after several passes through the wagering service.

It still leaves a direct trace but the set of coins held initially is mostly gone ne and the composition of the wallet after is mostly coins that weren't there before.

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But since it's not designed to do so, I wouldn't be so sure everything would work smoothly. – Lohoris May 8 '12 at 9:33
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I came across Bitcoinfog at http://www.bitcoinfog.com/. They run a hidden service in TOR at http://fogcore5n3ov3tui.onion

They have been down since mid August and are not back up. I think they cut and ran with peoples bit coins. Which is quite a risk for sites like this. It's happened to me before as well when I was "testing the waters" by running the coins through a tumbler site.

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