How To Anonymize Your Cryptocurrencies

Not to sound like a broken record, but privacy, including financial privacy, is a fundamental human right. No one on this planet has a right to look at your finances; they are yours and yours alone. Thankfully blockchain technology is empowering us to take back our fundamental rights from those who wish to control us. However, it’s important to understand that even though cryptocurrencies are decentralized and permissionless, they have traceable histories. If you purchased bitcoin from an exchange that uses an account, such as Coinbase, anyone who has access to that account will be able to see exactly how much bitcoin you have and how you spent it. Or, if the police traced the currency back to you from a previous crime, even if you had no involvement in that crime, they may attempt to confiscate it “in the name of the law”. If you want to keep your money hidden from prying eyes and thieves, you need to anonymize your money. This guide will help you do that.

First, a disclaimer. I am writing the guide for informational purposes only. What you choose to do with it is your responsibility alone. I do not condone using this procedure for hiding illegal activity. As always, it is up to you to know and follow the laws of your country.

In simple terms, the process consists of exchanging the currency you want to anonymize into a private currency and then exchanging it back into your original currency. There are several privacy-centric coins you can use for this process such as Monero and Zcash, but I’m going to use Dash for this process. The reasons I’m choosing Dash over the others are because it’s cheaper, faster, easier to use, and is available on more platforms. Now before anyone bleets out “Dash isn’t private” - yes it is. When using a properly configured Privatesend, the mixing is completely untraceable. I’m not going to go into the technical aspects on how Dash’s mixing works, but just so you have an idea, imagine taking a rock and grinding it down into sand, throwing that sand onto a beach, and then grabbing a new handful of sand. Even though the sand is out in the open, it’s impossible to determine which grains of sand belong to who. Other than the technical aspects, the key to successful mixing is dependent upon how large the beach is. Fortunately Dash’s beach is already plenty large and is getting larger by the day. If, however, you don’t feel comfortable with mixing-style privacy and prefer encryption-style privacy, the following procedure is essentially the same for all privacy coins.

Before you move forward, please make sure you’re working in a secure environment. Use a good and up to date antivirus, run a scan with Malwarebytes, password protect your profile, use full disk encryption, connect to your vpn, etc. If you’re not using a VPN, you really should. I recommend NordVPN. Your cryptocurrency is only as secure as the location you store your private keys. I have written other articles on basic privacy which would be a good place to start if this is new to you.

Let’s get started. For this guide I’m going to be cleaning some Bitcoin Cash and I’m going to be using Shapeshift as my exchange. Two other exchanges you may want to look at are Flypme and Changelly. In my case, I can’t use Flypme because they don’t have a Bitcoin Cash option. Regarding Chagelly, I don't like how the require an email, but you can use a fake one so it’s not a big deal, it just irks me. Importantly, I suggest that you look at the exchange rates of all the exchanges as they can be quite different. The exchange rate is where most of the cost of this anonymizing procedure comes from. Be prepared to take a hit during this process. You may want to do a test run with small amount to get an idea of what this is going to cost you. Lastly, since I will be using Exodus for both my source wallet and my receiving wallet, and since Exodus only allows one instance to be installed at a time, I will be using two separate OS profiles for this procedure. If you are are going to be using two different wallets though, you don’t have to create a new profile, you can do all of this in a single profile.

The first step is to install and configure the Dash Core wallet. At the time of this writing, the Dash blockchain is about 5gb’s, so you’ll need at least that much free space on your computer. Install it as you would any other program on your computer and make sure you turn on encrypted backups, record your password, etc. Once installed, you need to configure Privatesend. Go into the options and make sure it’s set to 1000 Dash and 8 rounds of mixing. By using 1000 Dash as your limit, this guarantees that any Dash you put into this wallet will always be mixed. Also make sure to check “Enable Privatesend Multi-session” as this will greatly speed up the mixing process. Earlier I mentioned that it was faster to use Dash than the other privacy coins, but there’s a fairly big caveat to that; it’s only faster if you already have a Privatesend balance larger than the amount you are wanting to clean. If you are starting with a zero balance, the mixing process will take much longer compared to using Monero, Zcash, etc. But if you maintain a Privatesend balance, using Privatesend is usually instant and at most only 2.5 minutes. Finally, click on Start Mixing to initiate the process.

Once you’ve got your Dash wallet up and running, you need to set up the wallet you’re going to use to store your cleaned coins. There are many ways to do this, such as using a hardware wallet or a paper wallet, but with my setup, I’ll create an entirely new profile in my Linux virtual machine that resides in an encrypted volume that I dismount when not in use (see this article for more info). After I’ve created my new profile, I’ll log into it and install Exodus as that’s my portfolio manager of choice. It’s safe and secure, has a nice interface, and holds several of the coins I’m invested in. It’s a little light on features but it’s probably the best multicoin wallet available right now. Obviously, since this is the final destination of your currency, taking proper steps to keep it secure, private, and backed up are imperative. Every wallet and environment is different so it’s up to you to figure this out.

Now that you’ve got your Dash wallet installed and have set up your ‘clean’ destination wallet, you are ready to start the cleaning process. Go to shapeshift.io or whichever exchange you want to use, and for the Deposit option, choose the coin you want to clean. In my example I’ll choose Bitcoin Cash. Then you need to select Dash as your Receiving coin. Proceed to the next screen and input your Dash receiving address, which you’ll get from your Dash wallet. For the refund address, get the address from your source coin’s ‘dirty’ wallet. Lastly, agree to the terms, and start the transaction. If you’ll notice, there is a maximum amount you can exchange at once. This is one of the reasons I chose Dash; if the amount you want to clean is quite a bit more than this maximum amount, you may have to repeat this process several times and Dash’s fees are very low. Once you’ve clicked on ‘Start Transaction’, you will be given an address that you need to send your Bitcoin Cash to. Copy this address and paste it into your ‘dirty’ wallet, input the amount you want to exchange, and then send it. Once you’ve sent your money, Shapeshift will shortly indicate that it received the funds and will start the exchange process. Sometimes this process is almost immediate, sometimes it can take hours. Always save the URL of this page until the exchange is complete in case an issue arises and you need technical support; it contains your transaction ID which is needed by them to help resolve your issue. Once the transaction is complete, go back to your Dash wallet and make sure the transaction has arrived.

If you don’t already have an existing Privatesend balance, you’ll have to sit back and wait for the mixing to complete. If you’re mixing just a little bit, this process may only take a few hours, but if you’re mixing a lot, it can take days. Fortunately with the release of Dash Core 12.2, mixing is much faster than it used to be. It will also get faster as the network grows and more people use Privatesend.

Once the mixing is done, you now need to exchange your cleaned Dash back into your original currency. To do this, you basically just have to repeat the process you just did, but in reverse. Go back to shapeshift.io, but this time choose Dash as your Deposit address and your Receiving address will be an address from your ‘clean’ wallet. Make sure that when you send your Dash to Shapeshift that you check the Privatesend option in the Dash wallet, otherwise you’ll have negated all the work you just did. If you’ve got more coins to clean than you can exchange at once, simply repeat this entire procedure until you’ve cleaned them all.

If you used a second OS profile but don’t want to maintain two profiles on your computer, after you’ve exchanged and transferred all of your coins from your old wallet to the new one, remove the old wallet from your main profile. Every wallet has a difference uninstall procedure, such as having to remove a config file, so may have to google how to do this. Once the old wallet is fully uninstalled, you now need to reinstall the wallet again but this time you instead want to restore by using the 12 word backup phrase from your ‘clean’ wallet. Finally, after you’ve verified that your new ‘clean’ wallet has been fully restored into your main profile and all of your funds are showing, remove the second profile and the now old ‘clean’ wallet.

To summarize:

1. Send dirty coin to shapeshift.io or another exchange
2. Exchange into Dash or another coin with privacy features
3. Mix with Privatesend or whatever your privacy coin of choice requires
4. Send back to Shapeshift
5. Exchange back to your original currency into a new wallet

I hope you found this guide helpful in your quest for financial independence, the backbone of freedom. As always, please comment below. I look forward to hearing from you!

Author: Chris Webb