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I'm pretty clear on how a Bitcoin mixer obscures transaction history, but I don't understand how an observer is not able to reasonably link the source and destination wallets simply based on the transaction sizes.

Example,

  1. I deposit 100 BTC into a mixing service's wallet
  2. Over some time the mixing service places 100 BTC into another wallet I have created.

If an observer has some interest in tracking me, they can view all wallet balances and determine which have had 100BTC placed into after my initial transfer to the mixing service. Assuming I don't use the end wallet for any other purposes, an observer simply needs to look for all wallets where about 100 BTC was deposited in them recently. This is probably a small list, and becomes even smaller as the amount to launder grows. If I wanted to launder 10000 BTC through a mixer, there are probably very few wallets that will have this amount deposited into them over such a short period.

The answer seems to be, "keep transactions small when mixing" but in a network where there is not much activity (compared to fiat currencies) it seems like tracking down laundering activity isn't very hard.

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  • > it seems like tracking down laundering activity isn't very hard Well, ... maybe not too hard to find patterns to highlight where to look further, but probably hard to prove beyond a reasonable doubt.
    – Stephen Gornick
    Sep 27, 2012 at 4:02
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    That's not really a question. Anyway, you can supply multiple addresses to the mixing service and make sure the amount sent to each one is small enough to be intermingled with others. Addresses are cheap, and the service should have the option to upload them in bulk.
    – Meni Rosenfeld
    Sep 27, 2012 at 6:55
  • You cannot really determine which addresses are associated in one wallet unless several are linked when a transaction is funded, then you have a probability that they may be from the same wallet.
    – Willtech
    Apr 18, 2018 at 3:44

1 Answer 1

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The mixing service could use various means to obfuscate the mixing - for example:

  • It can make you send coins to some off-line address, then send you your coins from its own supply of bitcoins before introducing your coins into the circulation again. This way it would appear that the transaction took place before you send the coins to the mixing service, and thus be harder to link
  • The service could split your Bitcoins into many smaller amounts and launder them each individually
  • It could deposit some of your money into some eWallets or similar services that use a shares pool of coins
  • It could use your money to purchase mining hardware and mint you fresh coins
  • The service could pay your money back to a few of your receiving addresses, making finding the final amount harder

Generally, there are many creative options of hiding things in the Bitcoin network, you just have to use your imagination.

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