What Is a Bitcoin Tumbler?

A Bitcoin tumbler is a service that makes it more difficult to trace the origin of BTC coins. Bitcoin tumblers work by pooling together BTC from multiple different users and then sending BTC back to the users that provided the coins to the pool. Bitcoin tumblers are also often referred to as Bitcoin mixers.

Since mainstream media outlets often portray Bitcoin as a digital currency used by hackers and other shady figures, there is a perception among some people that Bitcoin offers privacy to its users. However, this is certainly not the case in reality.

The reason why Bitcoin tumblers exist is because the Bitcoin blockchain is completely transparent — the details of every single Bitcoin transaction ever made are available for all to see. Tumblers can help users increase their financial privacy when transacting on the Bitcoin blockchain.

How do Bitcoin tumblers work?

The basic concept behind how a traditional Bitcoin tumbler works is that the tumbling service accepts BTC deposits from many different users. 

Each user’s BTC deposit is split into smaller amounts of Bitcoin, often using randomization to determine the split. Then, these smaller amounts are pooled together and “mixed”, which involves sending the coins to different wallet addresses. 

The final step is sending BTC coins from these Bitcoin addresses back to users. Of course, the address used to receive the mixed coins should be different from the address used to deposit coins into the tumbler. 

However, not all Bitcoin tumbling techniques work the same way. CoinJoin, which is gaining in popularity, is a non-custodial method that works differently from traditional Bitcoin tumblers, although it ultimately serves the same purpose (making the origin of users’ BTC more difficult to trace).

While Bitcoin tumblers can be a useful tool for those looking to boost their privacy while using the Bitcoin network, crypto users who are very concerned about protecting their financial privacy will most likely get better results with privacy coins such as Monero or Zcash instead of Bitcoin.

Custodial vs. non-custodial Bitcoin tumblers

There is an important distinction when it comes to Bitcoin tumblers. Some Bitcoin mixing services are centralized and custodial, while others are decentralized and non-custodial. 

Essentially, custodial Bitcoin tumblers require users to trust that the operator of the service will act honestly and return BTC coins to users after the tumbling process is completed. You also have to trust that they won’t misuse your information, such as your IP address.

Meanwhile, non-custodial Bitcoin tumblers use protocols such as CoinJoin to automate the mixing process and remove the requirement of having to trust any specific person or business to handle users’ Bitcoin honestly. Examples of non-custodial Bitcoin tumblers include Samourai Wallet’s Whirlpool feature and Wasabi Wallet’s built-in CoinJoin functionality.

CoinJoin is a technique where multiple Bitcoin payments are combined into a single transaction, making it difficult for anyone observing the Bitcoin blockchain to connect spenders and recipients. CoinJoin was invented in 2013 by prominent Bitcoin developer Gregory Maxwell. 

The risks of using Bitcoin tumblers

Using a Bitcoin tumbler service comes with risks that you need to be aware of. First off, the privacy offered by tumblers is not bulletproof. Blockchain analysis tools are becoming increasingly sophisticated and there is chance that even BTC coins that went through a tumbler can be traced back to their original owner.

In some cases, it might not be possible to identify the original address of tumbled BTC coins, but still possible to determine that the coins in question went through a tumbler. Cryptocurrency exchanges and other businesses that accept cryptocurrency might flag tumbled coins and refuse to accept them. 

If you are using a centralized Bitcoin tumbler service, there is also the risk that the operator of the service is dishonest and is just trying to steal users’ coins. This risk can be mitigated by using a decentralized Bitcoin mixing service instead.

Are Bitcoin tumblers legal?

While Bitcoin tumblers can be used legitimately by regular Bitcoin users as a way to improve the privacy of their crypto transactions, they are also unfortunately used by hackers, scammers and other criminals as a way to launder BTC coins obtained through theft or other illegal activity.

This is why Bitcoin tumblers are a controversial topic, and many tumblers have been shut down by national authorities over the years for allegedly facilitating money laundering.

In most jurisdictions, Bitcoin tumblers are not inherently prohibited, but practically all such services make no efforts to comply with regulatory requirements. For example, Bitcoin mixers usually don’t implement any KYC (know your customer) or AML (anti-money laundering) controls. Therefore, we can say that Bitcoin mixers tend to operate within a legal gray zone.

Unless a particular tumbling service is explicitly declared as illegal (such as Tornado Cash in the United States), users of a Bitcoin tumbler likely won’t have any issues with the law just for using the service.

Popular Bitcoin tumblers

So, how to actually tumble Bitcoins? Let’s briefly take a look at some of the most popular Bitcoin tumblers available to users today.

Whirlpool by Samourai Wallet

Samourai Wallet is a Bitcoin wallet that implements a Bitcoin tumbling feature called Whirlpool. This feature is based on CoinJoin, a Bitcoin privacy technique that we’ve already discussed above. Compared to many other CoinJoin implementations, Whirlpool uses multiple small and fast CoinJoin cycles instead of one large and slow CoinJoin cycle. This allows the tumbling process to complete more quickly.

Whirlpool charges a fee for tumbling Bitcoins, although the fee is flat, meaning that you’ll be paying the same in fees regardless of how many coins you wish to tumble. 

Wasabi Wallet

Wasabi Wallet is a Bitcoin wallet designed with a strong focus on privacy. The wallet comes with built-in support for CoinJoin and also routes all network traffic through the Tor network for even stronger privacy. 

Tumbling BTC through Wasabi Wallet comes with a 0.3% coordinator fee, but users also have to pay Bitcoin network fees. For users that want to tumble an amount smaller than 0.01 BTC, the coordinator fee is waived. This makes Wasabi Wallet a great option for users who want to tumble small amounts of Bitcoin. 

Similarly to Samourai Wallet’s Whirlpool, Wasabi Wallet’s Bitcoin tumbling feature is also based on CoinJoin. This means that the user remains in control of their private keys of all times and doesn’t need to trust any third party to keep their coins safe. 

Whir

Whir is another Bitcoin mixer utilizing the CoinJoin method. On Whir, users have the option to mix their coins either with a delay or as soon as possible, with the maximum delay set at 2 days.

The Whir service applies a fixed 1% fee on the BTC sent through it. However, for those seeking even greater privacy beyond the default setting, additional fees of up to 3% will be charged. Alongside the platform fee, users should also take into account regular Bitcoin network transaction fees.

Overall, Whir is a solid choice for BTC mixing, offering a straightforward interface that makes the entire process a breeze.

The bottom line

Hopefully, our article helped you understand what Bitcoin tumblers are and the reason why they exist. There are many different Bitcoin tumbling services available on the market, ranging from centralized and custodial platforms to decentralized and non-custodial protocols.

When using Bitcoin, it’s important to understand that the entire history of transactions is fully public and your on-chain activity can be traced in full. Bitcoin tumblers can help provide additional privacy, although the privacy they offer is ultimately not as powerful as using a natively private cryptocurrency such as Monero or Zcash.

If you want to learn more about the topic of Bitcoin privacy, make sure to check out our article exploring the best Bitcoin mixers available today.