Definition ∞ A decentralized mixer is a privacy-enhancing protocol on a blockchain that obscures the link between the sender and receiver of cryptocurrency by pooling and mixing multiple transactions. Unlike centralized mixers, these protocols operate without a central custodian, relying on cryptographic techniques and smart contracts to maintain anonymity. They aim to break the traceability of transactions on public ledgers. This process contributes to fungibility and user privacy.
Context ∞ Decentralized mixers are a significant point of discussion in cryptocurrency news, often highlighted for their role in enhancing transaction privacy but also attracting regulatory scrutiny due to potential misuse for illicit activities. Governments and financial watchdogs frequently debate their legal status and the need for stricter controls. Developments in zero-knowledge proofs are improving the privacy and efficiency of these systems.
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