Thank you both for your great answers. I believe that they will serve well for people who are checking the thread for answers.
LoyceV, n0nce, do you have any opinion on this specifically?
- Usage: Using ChipMixer after using a centralized exchange to purchase bitcoin
- Considerations/Questions: Is there a benefit to trading your coins from a centralized exchange for coins that may have come from malicious sources? Might using coins linked with your identity/centralized exchange open you up to risks depending on how the next person from ChipMixer uses your inputs?
- Opinion: I believe that this scenario is what poses the most danger to users who might think they are becoming more private, except instead they might be opening themselves up to more risk.
- Official Answer: *none yet
- Community Opinions: *none yet
While n0nce addressed it with a very valid response, it does not entirely address the level of risk someone is taking by using chipmixer
after buying coins from a centralized exchange. The difference is because the risk of this usage isn't necessarily about coins being confiscated as n0nce addressed (as they are already off-exchange before this usage plays out), rather what risk it could pose by putting those coins linked to their KYC/identity into ChipMixer, based on how other people use their inputs later.
Here is a practical example of my logic:
- centralized exchange user withdraws to their wallet[/b] (or worse, directly to chipmixer, but for the sake of the example lets not assume this)
- centralized exchange user wants privacy so they send to ChipMixer
- centralized exchange user gains desired level of privacy
- naughty human uses ChipMixer, gains centralized exchange users' coins and uses them for illegal purposes
- naughty humans' usage leads to linking with centralized exchange user who is then questioned for the usage, is left with no choice but to say they used ChipMixer, and probably faces a long line of questioning/discomfort, possibly even consequences for using ChipMixer (depending on jurisdiction).
I myself do not use centralized exchanges nor do I condone anyone to, I condone learning p2p trading and conducting this way. It's one of the key ways increase privacy exponentially in comparison to using centralized exchanges...though most people do prefer convenience and the fiat on-ramp is mostly unparalleled for convenience...also, not everyone is comfortable or experienced with local/p2p trading or know how to go about it even if they are not entirely new to the space. I believe this medium kind of people still may want privacy and may stumble upon ChipMixer or a similar service to gain privacy before spending their bitcoin.
I hope I am not antagonizing with my next comments, it is with good cause and intention...I have decided to make a "mixers - warning and caveats, and how to use them properly" thread with this research based on all of the info collected. Moving on.
Assuming my logic is correct, I think it is fair to say that the creator of such a service who is able to write so well about mixing theory would know about this possibility and potentially has chosen not to say anything about it. My guess as to why, is because the ChipMixer service would benefit the most from these kinds of inputs, as they are arguably one of the better kinds of inputs. I know, I know..."all coins are the same and there is no such thing as good or bad coins and we shouldn't let people tell us otherwise", but I think if you compare inputs from a centralized exchange user who has done their KYC and honest money to buy Bitcoin in comparison to coins that come from hacks or scams then I think this "all coins are the same..." logic turns into an idealistic belief rather than a realistic fact. I digress...
ChipMixer (and other mixers for that matter) may not explicitly state the risk that comes with the mentioned usage, as it would then eliminate the potential for a lot of these inputs to become a part of the service and may hinder the quality of the service, so, not saying anything about the risk is the better move for business.
I'd love to hear ChipMixer comment on this, but what do you both think about all of this?
- Usage: Using ChipMixer before using a centralized exchange to sell bitcoin
- Considerations/Questions: Is there potential for the exchange to question the source of funds? Is using ChipMixer explainable? Is "I used it for my privacy" enough for a centralized exchange to let you through? Or does using ChipMixer pose a risk to your coins?
You're asking this at the wrong place. Any third party can make up any kind of BS. ChipMixer has some nice examples on the website:
...Basic theory of Bitcoin mixing, part 1
What information is already public?
You go out to your favorite vegan store. You try to pay when owner checks something on their computer and visibly reddens. They start shouting about unfair practices and slavery of coffee plantations. You are banned and cannot come back. What happened?...
Baristas public address is well known. Vegan store owner may check if somebody transacts with them. When you paid for coffee - they did not know. But your vegan transaction is linked to previous transaction making it impossible to hide. If you could mix your Bitcoins you would have avoided that.
You are completely right in everything that you said so I won't address anything else, but I did have a thought about this when I read this on the website before you posted it, and at the time I thought, "in what world is using one address for all customer payments and labeling the store owner to that address the right way to go about a point of sales/payment gateway system?" If any store/service/anything with a payment gateway handling bitcoin transactions this way they should be pointed in the right direction of using a unique address per payment, as does the majority (as far as I am aware) of stores, services and gateways do from my experience. Personally I think that example is a bit unrealistic or outdated (depending on when it was written), that's just my opinion though.
Also, I noticed "advanced theory" hyperlinked here but it lead no where. Was that ever posted or is it in progress? Or was it removed for some reason?