A Bitcoin Tumbler is a service that helps protect the privacy of users transacting with Bitcoin by blurring their transaction history. It is important to note that despite their anonymity boosting capabilities, tumblers do not provide absolute anonymity, and using them for illegal activities can result in legal liabilities for users. For this reason, users who are very concerned about their financial privacy are advised to consider natively private cryptocurrencies such as Monero or Zcash in place of Bitcoin.
The way a tumbler works is simple: When you send Bitcoin to the tumbler, it mixes it with coins that have been sent by other users and transfers them to a new wallet generated by the tumbler. This makes it very difficult to trace the origin of these coins back to their original owners. This can significantly improve Bitcoin fungibility, as well as the privacy of those who use it.
As the use of cryptocurrencies continues to gain traction, the demand for Bitcoin tumblers has increased. As a result, new services have been emerging that offer more sophisticated obfuscation techniques. Some of these services are even integrated into cryptocurrency exchanges, allowing users to anonymize their transactions without leaving the platform.
While this is a great development for Bitcoin users, the use of tumblers has been linked to illegal activity such as money laundering and terrorist financing. As a result, some jurisdictions have started to limit or disallow the use of tumblers. Bitcoin Tumbler