Worried about bear market sentiments and volatility? Make sure to add these blue chip cryptos to your investment portfolio.

It’s nothing new: Whenever prices start to turn south in the financial markets, investors immediately seek sanctuary in safe haven assets with solid fundamental value. In other words, they seek out blue chips.

In this guide, we’ll dive into blue chip coins and break down what they are, how they work, how they differ from blue chip stocks, and most importantly, how to invest in them to reduce your risk while enjoying long-term profits.

Blue chip cryptos are established cryptocurrencies with institutional status, strong reputations, higher liquidity, lower volatility, and sizable market caps.

 has its origins in the game of poker. In 19th-century America, the game of poker ruled the frontier landscape as red, white and blue poker chips regularly exchanged hands. The blue chips always held the highest value.

The term is popularly believed to have first been used to describe stocks in the 1920s. According to reports, a Dow Jones employee coined the term after noticing certain stocks trading much higher than others.

Throughout the century, “blue chip” came to refer to much more than just a high-priced stock. Today, it refers to stocks issued by established, financially stable companies with strong reputations for weathering storms and withstanding the test of time.

When it comes to crypto, the definition of “blue chip” remains much the same. Blue chip coins, like Bitcoin and Ethereum, have established themselves as institutions in the crypto/blockchain space.

Bitcoin is the original crypto and unquestionably the most established. While it is still 

 at times, it has managed to consistently increase in value over time since its inception in 2008.

Due to their relatively recent emergence, blue chip cryptos like Bitcoin and Ethereum haven’t exactly stood the test of time like their stock cousins. However, they have 

, and they are considered to be financially stable by the masses.

Traditional blue chip stocks are typically a component of reputable indexes, such as the Dow Jones Industrial Average, S&P 500 and the NASDAQ in the U.S. In the UK, blue chips call the FTSE UK Index home. While no definitive benchmark exists as far as 

, a generally accepted benchmark for a blue chip stock is a market cap of $5 billion.

Blue chip stocks are leaders in markets, industries and sectors. Some examples of companies with blue chip status include Amazon, Google, Walmart, Disney, Coca-Cola, General Electric and IBM. These are all highly liquid, highly respected, highly reliable, and most importantly, highly stable. This makes them safe investments, especially in bear markets.

For the most part, the same holds true for blue chip crypto. Over 

 have been minted, and more and more seem to be added each day. However, very few have earned a strong enough reputation or reached a market cap worthy of blue chip status.

Despite being fairly new and not having existed for as long as some blue chip stocks, Bitcoin and Ethereum have stood out as blockchain pioneers and 

 you can count on in almost any market condition.

First and foremost, blue chip cryptos aren’t exactly the new kids on the block. In fact, quite the opposite is true. They’ve been around for well over a decade and have withstood a wide variety of market conditions. As the original cryptocurrency and founding parent of blockchain technology, 

 than any other, helping it achieve its blue chip crypto status.

In the traditional world of stocks, the term “blue chip” is used to describe a well-established company globally recognized as a reliable investment. Blue chip companies have strong reputations for creating quality products or services and weathering downturns. The same can be said for blue chip coins like 

, which have strong reputations within the investor community and the entire world.

No other coin has as much institutional support as Bitcoin. While Ethereum and its DeFi platforms are considered blue chips with some serious investors, Bitcoin is currently a part of corporate balance sheets like 

 crypto or stock status. As two of the crypto world’s heaviest hitters, Bitcoin and Ethereum blow this figure out of the water. With respective current market caps of $1 trillion and $500 billion, they definitely meet the mark.

 and being able to easily move in and out of positions is another hallmark of blue chip coins and stocks. Billions of BTC are traded every day, so unless you want to buy or sell millions worth of coins, you’ll find a market flush with liquidity whenever you need it.

Sending and receiving your cryptocurrencies play a major role especially when funds are transferred from one wallet to another. It can either be between 

 wallets. Cryptocurrencies like Bitcoin and Ethereum have to be highly interchangeable with one another in order for more adoption to take place. Users would want to be able to exchange BTC in return for ETH of the same value instead of using an illiquid asset like 

At its core, crypto is all about decentralization. However, some coins are more decentralized than others. 

 in general are imbued with the concepts of equality and independence and represent the embodiment of democratic ideals.

 checks all of the boxes above, making it the premier blue chip crypto and a safe haven for anyone looking for less volatility and greater long-term growth. As the very first crypto ever created, Bitcoin has survived longer than any other cryptocurrency and certainly qualifies as a high-quality asset.

With its long track record, it should come as no surprise that Bitcoin also has the largest market cap of any cryptocurrency. In fact, 

is such a driver in the crypto space that the price movements of other blue chip coins and non-blue chip coins alike often depend on it for guidance.

Unlike other cryptos and blue chip coins, Bitcoin investors and traders enjoy the first-mover advantage. They also benefit from Bitcoin’s scarcity. With only 

 ever to be available, the price of BTC continues to climb and prove itself as a rock-solid blue chip crypto investment.

As a whole, ETH commands 20 percent of the crypto market. Yet, it continues to improve and evolve, making it an ever more important component of the 

With its widespread usage and advanced technology, Ethereum is without a doubt one of the top blue chip coins worth investing in almost any time, but especially in times of crisis when considerations of safety and security outweigh the desire for explosive short-term gains.

Among the many projects in crypto, some of them have secured their position as 'lower tier' blue chips. As competition is high and few have the potential to survive through a 

, here are 3 blue chip coins following behind Bitcoin and Ethereum.

 was launched in 2017 as the native coin of the Binance ecosystem. It has the third largest market cap in crypto at $47.9 billion, excluding stablecoins like 

. BNB has survived well and is still following behind Ethereum strongly with no other coins near its market cap. Users can use BNB to pay for gas on the BNB Chain or receive fewer 

 was created in 2012 for Ripple’s payment platform. The 

 was initially popular for its instant money transfers to anywhere in the world but has dropped off since many other projects started coming on board. Since its beginnings, it has climbed to the fourth largest market cap behind BNB at $17.8 billion, despite the 

. Although XRP has come a long way, it remains to be seen if XRP would be able to survive future bear markets.

 was launched around the same time as BNB in 2017 for the Cardano network and as a competitor to Ethereum. As the fifth largest crypto by market cap, ADA trails behind XRP at $17 billion. While Cardano is still in heavy development, the

 which promises to increase throughput by multiples on top of the deployment of smart contracts and 

previously, making Cardano a perfect option to consider for the future.

If you’re interested in investing in blue chip cryptos according to past performance, you first need access to a platform like 

 currency into blue chip coins and follow a few more steps.

To buy and sell blue chip crypto, you need to choose a cryptocurrency exchange to use. Crypto exchanges are similar to stock trading platforms like E*Trade, TD Ameritrade or Schwab. As one of today’s top exchanges for investing in blue chips and other coins, 

Once you’ve selected a reputable crypto exchange like Bybit, you then need to 

by providing your name, address, email address, and any other information required to verify your identity and residential address.

A photo ID and a recent utility bill or bank statement will also be needed. This is known as the 

 process, and it’s a legal requirement for exchanges operating in the U.S. While most accounts are instantly approved, you may have to wait a day or two for your account to be verified.

In order to invest in blue chip coins, you’ll next need to fund your account. The cheapest way is to link your bank account and exchange account. However, this can take a few days. To save time, you can buy blue chips with a credit or debit card instead. The fees are a little higher, but you have the added benefit of near-instant deposits.

With your account funded, it’s finally time to buy some crypto. Bybit and similar popularly used platforms allow you to easily scan, 

, and purchase any number of cryptocurrencies, including blue chips like 

, enter how much you’d like to buy (how much you want to spend), and let the exchange process the transaction. There are different types of buy orders you can execute, depending on your trading experience and goals, but for the most part, that’s all there is to it.

The second option is more popular and is highly recommended. With your own 

, you hold the keys and have complete control over your crypto, with zero susceptibility to third parties. Known as “

”, these stores your cryptocurrency offline on 

While learning how to set up and use a crypto wallet can take some getting used to, it’s a safer overall choice for avoiding hackers, errors, outages, and anything else that might pose a threat to your funds’ safekeeping on an exchange.

If you’ve been a fan of crypto and DeFi for any length of time, it’s great hearing terms like “blue chip” being used to reference them. We’re used to hearing about safe stocks with predictable returns, but we’re just now starting to see this attitude toward the crypto world. With the rise of blue chip cryptos like Bitcoin and Ethereum, investors can safely put their money into assets that possess the rare combination of both security and profit potential.

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What Are Blue Chip Cryptos: Are They Safe Bear Market Options?

From veterans like Ethereum and Polkadot to up and coming projects like Aptos, these are the best layer 1 crypto projects to invest in during the bear market.

If you're searching for the best crypto to invest in during the bear market, you’ll first want to understand how to differentiate crypto projects from one another. Many of the best cryptos to invest in are Layer 1 cryptos, which include platforms like 

. The issue with these platforms is that they 

In recent years, developers have created 

 for consensus and security. With Layer 2 protocols in place, Layer 1 

 have become less of an issue. We’ll take a closer look at some of the best Layer 1 cryptos to invest in during the bear market.

The term “Layer 1” refers to the initial layer of a crypto ecosystem or platform. For instance, Ethereum is currently considered a Layer 1 blockchain, with Layer 2 projects that have been placed above it for added functionality.

Layer 2 projects, which can be placed on top of Layer 1 blockchains, include everything from 

 (DeFi). In most cases, Layer 1 is the base layer and primary security provider for the entire network. During a bear market, when many cryptocurrencies and projects are declining in value, it's highly recommended that you get back to the fundamentals by placing your investments into 

A smart contract platform typically consists of three components, which include security, decentralization and scalability. However, having all three of these components is very difficult (hence, the 

). Many smart contract platforms have two of these components firmly in place but are relatively weak when it comes to the third.

Platforms like Bitcoin and Ethereum are considered to be decentralized and highly secure but aren't necessarily scalable. In comparison, a platform like 

 has issues with decentralization but is considered to be scalable and secure. Ethereum — due to its popularity for creating DApps — has experienced such difficulties with scaling that they’ve needed to charge higher fees to cover the expenses. In return, many users have chosen to invest in other platforms. (Note: 

, Ethereum’s long-awaited upgrade, is ongoing at the time of this article’s writing.)

As the first system that's built in a blockchain, Layer 1 is able to perform standard functions, such as performing transactions. While the following Layer 1 list includes more than a dozen of the best smart contract platforms, Bitcoin is still the most common Layer 1 cryptocurrency. Layer 2 cryptos are protocols that are built directly on top of the Layer 1 structure for the purpose of resolving cost and speed issues. Two examples of Layer 2 blockchains include on Bitcoin are the 

. On the Ethereum side, examples of Layer 2 blockchains would include 

What Are the Best Layer 1 Crypto Projects?

If you want to know which crypto to buy now, the following list of Layer 1 cryptocurrencies takes a comprehensive look at 18 of the best Layer 1 cryptos to invest in. Every coin in this list has proven to be popular among crypto investors.

 is currently the most popular and widely used currency. It's considered to be among the best cryptos to invest in because of its high value and lengthy history, as well as its original status as the most notable form of digital cash. 

Currently, Bitcoin has the highest amount of liquidity among all cryptocurrencies, which means that no one has difficulty selling or purchasing Bitcoin. Even though Bitcoin experiences volatility as part of a volatile asset class, it's among the most stable options available to investors, which places it among the best Layer 1 cryptos. Note that although Bitcoin operates on a 

 (PoW) consensus, it’s considered to be the best crypto to invest in because of its sizable market share.

 is considered to be the very first smart contract platform, and it has the largest market capitalization among all such Layer 1 networks. As such, it's considered one of the best Layer 1 crypto projects to date.

 (EVM), a decentralized computer that developers interact with while creating smart contracts. (Other Layer 1 networks in this list, such as Avalanche and Binance Smart Chain, are EVM compatible as well.)

Because of this compatibility, many other cryptocurrencies are based on the code that Ethereum uses, which allows developers to implement their projects on numerous blockchains. Even though Bitcoin is the most widely used currency on this Layer 1 list, Ethereum has a strong ecosystem and is considered to be the most decentralized Layer 1 currency, which makes ETH one of the best cryptos to invest in.

As the most hype-filled project of 2021, 

 certainly has the potential to become one of the best Layer 1 crypto projects of all time because of its unique consensus mechanism. Transactions are timestamped when placed in a completely new block within the chain. Along with supporting smart contracts and a range of DApps, Solana is considered to be a high-performance blockchain. Its goal is to maximize efficiency, which makes Solana as one of the best smart contract platforms. 

It can process a maximum of 65,000 TPS which is considered one of the fastest in DeFi. This was one of the leading factors along with the Ethereum killer narrative that pumped its native token SOL by 17055% in 2021. Since then it has retraced to local lows which makes it attractive and affordable to investors that were interested in Solana before.

 is another EVM-compatible blockchain that aims to solve the scalability issues that have plagued Ethereum. This platform uses the C-chain as a proprietary network chain, similar to the EVM. By using the C-chain, developers are able to create smart contracts built with Ethereum in mind, which makes Avalanche among the most versatile cryptos in this Layer 1 list.

The C-chain comprises two additional blockchains: The Platform Chain and the Exchange Chain. When these chains work on specialized tasks, it's possible for the network to become more efficient and scalable, which is why Avalanche is one of the best Layer 1 cryptos. Additionally, the network has expanded to include subnetworks which work similarly to sharding Ethereum 2.0. Avalanche is well on the way to its goal of becoming a worldwide asset exchange.

 is another Ethereum-compatible platform. It offers a native token known as ATOM. This platform is application-agnostic, which means that it's fully interoperable with the Ethereum mainnet and similar 

 ecosystems. The platform's interoperability makes it among the best cryptos to invest in. Cosmos focuses on providing features that aren't available on Ethereum.

Since developers can launch Ethereum applications on the Cosmos platform without needing to rewrite code, it’s proven to be popular among developers and investors alike. Additionally, the network will be deploying interchain 

which will drive more use cases for ATOM. Cosmos aspires to be at the forefront of decentralized finance, which makes this currency unique among the other cryptos in this Layer 1 list.

, an open-source blockchain, enables separate blockchains to become fully interconnected via the creation of 

. Every chain that's created on the Polkadot platform is made with a modular framework, which is ideal for developers. Polkadot focuses on transparent governance, upgradeability and scalability, the latter of which is absent from many cryptos in this Layer 1 list.

Polkadot's native token is known as DOT, which is used to incentivize uses in the 

. One notable advantage of using this platform is that developers use a shared security system, which means that they don't need to take steps to bring in validators or miners for security. Polkadot is among the best Layer 1 cryptos because of its large market cap which positions it as a top-ten coin.

, an ERC-20 token that's positioned on the Ethereum blockchain, is the primary coin associated with the Crypto.com exchange. The purpose of this coin is to accelerate and fuel the mass adoption of cryptocurrencies, which makes it among the best Layer 1 cryptos. CRO comes with a high APY interest rate for staking via 

Members also get relatively high discounts on exchange fees. If you decide to opt into a syndicate event, you can purchase numerous cryptocurrencies at a 50% discount. Keep in mind that holding a specific amount of the CRO currency gives you access to additional features and perks, which mainly include high-interest rates when 

the coin. Some investors find CRO as one of the best cryptos to invest in because of its reward system.

 aims to be a competitor to Ethereum, with a focus on scalability as well as ease of use. The platform's scalability is centered around two distinct layers of technology, which include technologies for transferring value and tracking ledger balances.

Its native token, ADA, soared in market cap to become one of the best Layer 1 cryptos after their 

 which introduced smart contract capabilities for developers to build DApps and NFTs. The network is set to undergo another upgrade on September 22. The 

 enhances its speed and scalability which brings Cardano one step closer as an 

At the moment, Cardano has an existing supply of around 33.8 million. If you're wondering which crypto to buy now, ADA is a great investment because it can be used as a 

 (BSC) is another EVM-compatible platform. It offers low fees of around $0.15 per transaction and discounted fees on its native exchange. Even though the BSC network comprises some centralization, its native token BNB facilitates quick and affordable transactions on a secure network.

, it makes BNB among the best Layer 1 cryptos. Some investors believe that BSC offers better performance than Ethereum, even though it relies on the Ethereum developer community. Along with affordable transactions, BSC has quick adoption rates, while also accommodating bridging, which facilitates easy token migration.

 is an open-source blockchain that supports the creation of DApps. NEAR is secure, highly capable and intuitive.

This crypto platform uses sharding technology to allow for infinite scalability. Smart contracts are fully compatible, and gas fees are considerably lower when compared to those on Ethereum. NEAR also works as a storage layer which developers can pay to maintain their 

It also has a Layer 2 scaling solution that is compatible with Ethereum called Aurora. It relies on the speed and scalability of the NEAR blockchain with the reach of Ethereum. This lets developers build DApps compatible with Ethereum at a cheaper cost without changing the code base. It also makes it easier to scale without worrying about expensive gas fees and other drawbacks that come with Ethereum. 

This makes NEAR attractive to investors as the protocol implements new features such as its stablecoin USN that provides additional use cases to NEAR.

 is hyped up to be one of the best Layer 1 crypto projects thanks to its goal of becoming the "nervous system" for any smart cities developed in the future. With prolific developer Andre Cronje ponce at the project's helm, many investors were excited for Fantom's advanced distributed ledger technology that could power an array of smart services.

 technology to provide additional scalability while also facilitating instant crypto transactions. The inclusion of a high-performance virtual machine means that smart contracts are easy to create and deploy. The Fantom Foundation has plans to release their Fantom Virtual Machine  (FVM) next year, which will have Solidity compatibility and parallel processing.

Currently, you can use the FTM token for governance, staking and paying fees. FTM has a market cap of more than $675 million and has been relatively inexpensive since its decline at the start of this year.

 is a popular blockchain that was founded in 2017 but only launched its ALGO token later in 2019. Algorand is based on a PoS mechanism and is considered to be more secure than some other PoS platforms, which makes it the best among Layer 1 cryptos.

Validators on the Algorand platform are selected at random, which makes it almost impossible to predict who will be the best-performing validator. The primary benefits of investing in ALGO and using the Algorand platform include complete decentralization, less time needed for verification, 

, an experienced team and a low potential for hard forks.

 is a decentralized platform with a focus on bridging decentralization and scalability. While Harmony was among the best Layer 1 crypto platforms in 2021 due to the soaring popularity of GameFi DApp, DeFi Kingdom. Their native token ONE cannot be mined, but rather staked to earn rewards. To do so, you’ll need to have the Harmony One extension installed into your web browser, which lets you perform transactions.

Harmony One has improved some of the weaknesses that exist in blockchain technology and has already cultivated a lengthy list of partnerships across many industries. Harmony One has a market cap of more than $250 million.

 is a highly popular smart contract platform that aims to deliver extensive scalability options through the use of sharding technology. The native token of this crypto platform is EGLD, which was initially launched on the Binance DEX. It's believed that Elrond eGold is around 1,000 times more scalable than Ethereum.

If you're wondering which crypto to buy now, EGLD is a great option because of its fast transaction speeds, superior network security and strong DApp ecosystem. EGLD has a market cap of nearly $1.4 billion, with a single coin worth approximately $60 and a circulating supply of more than 22 million EGLD.

 is a carbon-negative network that acts as a distributed ledger for transaction fees and payments of all types. This includes in-app payments, micropayments and even network protection. It uses a technology called the directed acyclic graph (DAG). This technology allows the network to achieve lightning-fast transaction speeds of up to 10,000 transactions per second (TPS) with low fees of only $0.0001 per transaction.

Hedera is also 885,000 times more energy efficient than Bitcoin. Users burn just 0.001 kilowatt-hours of energy per transaction, compared to transactions in Bitcoin that consume 885 kWh of energy. Due to this carbon-negative nature, many energy-conscious individuals have speculated for Hedera to be one of the best Layer 1 crypto projects in the near future once it gets mainstream adoption.

 that provides users with complete control over their transactions. The XMR token is also considered to be completely fungible. If you decide to invest with the Monero platform, you'll discover that it's possible for transactions to be linked and that addresses cannot be tracked.

This platform doesn't come with a block limit and is considered to be dynamically scalable. In the event that the Monero supply ever runs out, a continuous supply of 0.3 XMR will be available to further incentivize miners. Users are able to make transactions visible to other users, which means that Monero can be audited by officials for any sign of foul play.

 is a unique crypto project that's outfitted with a new payment protocol meant to streamline international payments. Its XRP token acts as a cryptocurrency, as well as powering this digital payment network that accommodates financial transactions.

The two primary reasons to use Ripple as your Layer 1 crypto project of choice include affordability and a high market cap of $35 billion. As a payment processor and currency exchange, Ripple uses XRP to facilitate transactions and competes with traditional payment validation and remittance systems like Swift, ACH, and Payoneer. This makes XRP an investment with huge potential should they succeed in taking market share from the traditional payment companies.

is a brand new blockchain that's pegged to be one of the best as it was created to compete against other best Layer 1 crypto projects like Solana. The cryptocurrency promises users increased scalability, security, usability and reliability over other Layer 1s.

While Aptos is still in the early stages of planning, experts are already beginning to talk about the Aptos blockchain as it has raised millions of dollars from investors. The blockchain is based on the Diem blockchain initiative (from Meta) that was abandoned.

The network plans to launch its native token APT in Q4 2022, which makes the launch of Aptos highly anticipated. This is a project that you might want to keep an eye out for. If the launch is successful, we could see APT explode just like what happened to SOL previously.

Where to Buy the Best Layer 1 Crypto Projects

Now that you have a good idea of some of the best Layer 1 cryptos on the market, you'll need to know where to purchase them. If you're interested in buying BTC, you can do so on platforms like 

, which is a popular cryptocurrency exchange that currently boasts more than six million members. Purchasing cryptocurrencies like BTC on Bybit is simple and straightforward.

Bybit has a sleek and intuitive interface that's designed to streamline the process of buying Bitcoin and other currencies detailed in this Layer 1 list. There are several methods you can use to buy Bitcoin on Bybit, which include credit or debit cards, or trading other cryptos for Bitcoin.

The steps for buying Bitcoin or other cryptos on this Layer 1 list depends on the device that you're using. Depending on the device that you’re using, you can purchase your cryptocurrency via the Bybit mobile app or web page. Follow the steps below to use the Bybit App:

Once you've obtained your Bitcoin, you can choose to hold it, trade it, or stake Bitcoin through the Bybit platform. The Bitcoin that you hold will be stored in your Bybit account and can be accessed at any time through the Bybit web page or mobile app.

If you want to trade Bitcoin, Bybit accommodates many trading pairs via our derivatives and spot markets. You can also stake your Bitcoin in order to increase your investment portfolio’s digital assets. Finally, 

 allows you to earn a fully guaranteed APY. You can also choose to stake or unstake your Bitcoin holdings whenever you want.

Now that you've gained some understanding of the best available smart contract platforms and Layer 1 cryptos, you now have a better idea of which crypto projects are fundamentally strong and deserve your investment. Each of the 18 projects detailed in this Layer 1 list has proven to be popular among crypto investors and stand out for specific reasons. With this educational piece on the best Layer 1 crypto projects, we hope you're better able to make investment decisions after doing your own research.

Keen on getting started? Take advantage of our zero trading fees and begin your crypto investment journey with Bybit today.

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Best Layer 1 Crypto Projects To Invest In During the Bear Market

A Bitcoin mixer is software (or a service) that accepts Bitcoin from multiple users, mixes them so you can’t identify who sent how much, and then sends out different bitcoins to their destinations.

If you’re familiar with the fundamentals of the 

 blockchain, then you know that it's a public ledger where you can view every transaction along with associated wallet addresses. However, the real-world identities of the wallet holders are hidden. 

Well, not entirely. There are ways to uncover the names of wallet holders. That’s why blockchain addresses are said to be “pseudonymous,” rather than anonymous.

The need for privacy has led to the rise of Bitcoin mixers, also known as Bitcoin tumblers. 

Keep reading to understand what these are, how they hide your financial transactions and identities, whether they’re legal, and the various types of mixing services available. 

A regular Bitcoin transaction works as follows: A user sends coins from their 

 and enter either of the wallet addresses to find out where the coins came from (or who received them), and the amount of BTC transacted. 

Using advanced tools, one can easily find the real-world identity of the persons behind the wallet addresses. With that, all of your transactions can be traced. 

We’ve already established that Bitcoin transactions aren’t hidden. While that’s one of the network’s main selling points, it’s also one of its drawbacks — because some Bitcoin users aren’t comfortable with the fact that anyone can use a Bitcoin explorer to view the entire record of their transactions. 

If you want complete privacy in your crypto dealings, you need a Bitcoin tumbler (or “mixer”). 

A Bitcoin mixer is software (or a service) that accepts Bitcoin from multiple users, mixes them so you can’t identify who sent how much, and then sends out different bitcoins to their destinations. 

If you were to view such a transaction on an explorer, you’d find the address of the mixer as the recipient (in the case of an outgoing transaction from your wallet) instead of a Bitcoin address. Similarly, if you typed in a transaction recipient’s address, and looked to see where the coins came from, all you’d find would be the tumbler’s address. 

It’s called a “mixer” because it mixes your coins with other holders' coins to the point that none of them can be connected back to their original wallet addresses. 

Hence, when you use this solution, you can send Bitcoin or receive it while remaining completely anonymous. 

These anonymous transactions aren’t always free. Some of these Bitcoin tumblers require you to pay service fees for mixing your coins. 

There are two main categories of Bitcoin mixers — centralized and decentralized — and they work differently from each other. 

Overall, tumblers work by collecting Bitcoin from multiple users and combining their transactions — or, to use a metaphor, “putting all the coins in one big box and mixing them” so you can’t trace their origin, and then sending the coins to their various destinations. 

Now, let’s get into the specifics of how each method works after reviewing the two types of mixers. We’ll explain using a somewhat simplified version of the actual process. 

Centralized Mixers vs. Decentralized Mixers

The purpose of a Bitcoin tumbler is to disrupt the link between your real-world identity and your crypto wallet address. Doing so adds anonymity to your crypto transactions. 

Centralized Bitcoin mixers are privately-owned software or services that mix your coins for you. 

 is one of the most popular centralized Bitcoin mixers.

To use a centralized Bitcoin tumbling service, you send your Bitcoin to a specified address (the mixer’s address) instead of directly to your recipient. 

There’s usually a form on such tumblers that you fill out where you specify the recipient’s wallet address or your destination address. 

After you send Bitcoin to the mixer and pay their service fee, they add your coins to a pool and mix them with other users’ coins. Then they send fresh coins to the destination addresses. 

Decentralized Bitcoin tumblers require multiple users to contribute to a single large transaction. As a peer-to-peer protocol, decentralized mixers are permissionless and borderless. 

Here, the Bitcoin tumbling process is automatic. Protocols like 

 are two of the most well-known decentralized mixers.

When you make a transaction using a decentralized mixer, it becomes part of a larger transaction with multiple participants, all sending their bitcoins to another address. 

Of course, this mixes everyone's coins. The same number of bitcoins will arrive in your destination wallet after a specific period, but you’ll almost certainly not receive the same bitcoins you put in. 

The upside to using decentralized Bitcoin blenders is that you usually pay lower service fees (since the mixing process is automated). For example, the service fee of centralized mixer 

 for mixing of more than 0.01 BTC (mixing less than 0.01 BTC requires no service fee). 

The biggest benefit of using a Bitcoin mixing service is enhanced privacy of transactions and anonymity. They help you keep a low profile while dealing with cryptocurrency. However, it has quite a few drawbacks.

The primary drawback of nearly all Bitcoin mixers is that you often have to delay the transaction from the mixer to your destination address. This is done in order to make Bitcoin analysis much harder, even for keen observers. (There’s usually an option to adjust the duration of the delay.) 

Although delays aren’t a requirement, they are preferred, as they increase the gap between input and output and, therefore, the difficulty of finding the transactions. 

The ability to obfuscate crypto transactions also makes Bitcoin mixers a target for regulators — and a hotbed for money laundering. That’s why some exchanges consider mixed coins tainted, and don’t allow or restrict the transactions on their platforms. 

The biggest con of a centralized Bitcoin tumbler is that there’s a single point of failure, since it’s run by one entity. 

If the network shuts down for any reason, then you’ll lose all your funds that were in process. Even if the network doesn’t shut down, there could be the risk of a hacker — or even the centralized mixer stealing your funds.

In addition, since some centralized mixers privately save both your input and output Bitcoin addresses, you risk losing anonymity if the centralized network shares your information for any reason. 

A major downside of decentralized mixers is that they need many members to mix coins, lest your transactions be traced back to you through the process of elimination. 

Bitcoin mixers, and crypto mixers in general, aren’t illegal. However, these solutions are occasionally associated with money laundering and other illegal activities. This has led to shutdowns by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and other agencies. A few of these events are mentioned below.

In late 2021, the ex-CEO of the Bitcoin mixer Helix admitted that he had 

, another Bitcoin mixing service, was also involved in a money laundering conspiracy, though its alleged operator claimed innocence.

, which operated on the Ethereum blockchain, was 

 on Aug. 8, 2022, because the mixer had been used to launder over $7 billion worth of virtual currency. 

If you don’t want to use coin mixing services, there are other ways to hide your crypto transactions. Three of these are listed below. 

, a Layer 2 scaling solution for Bitcoin, not only allows more transactions to be processed but also 

. It does so by grouping transactions together, making it difficult to trace individual transactions.

 obscures the spending of BCH and makes transactions difficult to track through its CashFusion privacy tool.

 (ZEC) are also good options for making anonymous transactions. These coins use special privacy technologies, such as shielded addresses, that can hide the transactions of the coin in the blockchain. 

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What Are Blue Chip Cryptos: Are They Safe Bear Market Options?

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Best Layer 1 Crypto Projects To Invest In During the Bear Market

Investing

What Is a Bitcoin Mixer – And How Does It Work?

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APR vs. APY in Crypto: What's the Difference?

Investing

Top 10 Crypto Passive Income Strategies of 2022

Investing

DYDX Token: Determining the Future of dYdX DEX

Investing

10 Best Crypto ETFs To Invest In (2022 Edition)

Trading

What Is the Crypto Wash Sale Rule?

Investing

Grayscale Bitcoin Trust (GBTC): All You Need to Know

Investing

How to Use TradingView on Bybit

Investing

Crypto Chapter 11 Bankruptcies in 2022: What You Need to Know

Investing

Trading Journal: What It Is & How to Maximize Profits With It