Tumbler Key Points
- Tumbler is a service used to mix potentially identifiable or ‘tainted’ cryptocurrency funds with others, so as to obscure the trail back to the fund’s original source.
- Tumblers take a percentage transaction fee of the total coins mixed to turn a profit, typically 1-3%.
- Though legal, they are controversial and can be used for illegal activities including money laundering and hiding assets.
- They are central to maintaining privacy within the blockchain, but can also compromise the trustworthiness of the system.
Tumbler Definition
A Tumbler, also known as a mixer, is a third-party service that is used to break the link between a Bitcoin address sending coins, and the addresses they are sent to. This increases privacy by making transactions more difficult to trace on the blockchain.
What is a Tumbler?
A Tumbler is a service that mixes potentially identifiable cryptocurrency funds with others, to make it harder to trace the transactions. It is primarily used with cryptocurrencies like Bitcoin that are public and transparent by design.
Tumblers are used to add a layer of privacy to transactions by obfuscating the origin of the coins, making them harder to trace on the blockchain.
Who Uses a Tumbler?
Tumblers are used by individuals or entities that value their privacy and wish to keep their transactions anonymous. This may include those who are concerned about third-parties tracking their transactions, as well as those who may be involved in illicit activities.
Tumblers are also used by businesses that accept cryptocurrency payments, to maintain the privacy of their customers.
When and Where are Tumblers Used?
Tumblers are used whenever a user wishes to send or receive cryptocurrencies in a manner that is difficult to trace. They can be used anywhere in the world, as long as the user has access to the internet and the necessary resources to transact in cryptocurrency.
The use of tumblers is more prevalent in regions where cryptocurrency use is widespread and there is a greater need for privacy.
Why is a Tumbler Important?
A tumbler is important because it provides privacy and anonymity in the otherwise transparent world of blockchain. By breaking the link between the sender and the receiver, it makes transactions more difficult to trace and adds an extra level of security for users.
However, it is also controversial because it can facilitate illegal activities, such as money laundering or tax evasion.
How Does a Tumbler Work?
A tumbler works by pooling together coins from various users and then redistributing them in a random, complex manner. The goal is to make it difficult to trace the original source of the coins.
The users send their coins to the tumbler, which then sends back the same amount of coins from a different source, effectively ‘washing’ the coins and making it harder to trace their original source.
