A bitcoin blender is a service that allows you to mix your bitcoins with those of other users, effectively making it more difficult for anyone to trace your transactions. Often times these services will give you back new bitcoins that are unlinked to your original ones, minus a small fee. These mixers are a vital tool in maintaining the privacy of bitcoin users, especially in this age where financial transactions can be easily tracked.
The basics of a bitcoin mixer work in similar ways to how money in the banking system is deposited and transferred between accounts. The difference is that Bitcoin is a decentralized system, so mixers are typically run by independent third parties, whereas the blockchain provides a level of transparency that can be used to track spending and even identify the users behind specific addresses.
A bitcoin mixer works by combining the user’s bitcoins with those of other users in a pool. This pool is then jumbled up and redistributed to a number of different output addresses, which are then sent back to the user in a completely randomized fashion.
This makes it much more difficult to trace the origin of the bitcoins that were mixed, or even identify which users were involved in a particular transaction. While these mixers are frequently associated with illicit activity, they are actually a legitimate tool used by individuals to maintain a degree of privacy in the Bitcoin ecosystem. Several popular mixers include Yo!Mix, Sinbad and Mixtura, which all offer low minimums, high anonymity levels and a wide variety of features.