Privacy is important and a basic human right. It is not just for criminals. If you don’t agree, this article is not for you.
Moving on. This article will explain some good practices that I have learned.
Move a small batch of coins to Samurai’s Whirlpool pre-mix wallet, and from there select a coinjoin size you wish to participate in. For example, if you have 0.1 bitcoin moved to a premix address, you can enter the 0.01 coinjoin. You will have ten 0.01 bitcoin units mixing with others. (You actually need a little more than 0.1 because you pay a small fee for joining and another for mining. Once your coins are mixing, they can keep mixing indefinitely without any additional cost.)
For best anonymity, it is best not to rejoin your mixed coins to a single 0.1 BTC output, otherwise you could undo your privacy. But having ten 0.01 separate UTXOs in 10 different addresses can eventually get messy, especially if you are planning on keeping good records to comply with tax laws. (Just because you want privacy doesn’t mean you are planning not to pay tax.)
Also, every time you make payments greater than 0.01, to keep your UTXOs separate, you’ll need to make more than one transaction and pay mining fees more than once. This is OK now, but later, fees might be very expensive.
Assuming you want to merge your tiny mixed outputs, what is the risk?
First, the ten separate UTXOs are known to be owned by a single entity once you merge.
Second, they could be linked back to the original pre-mix 0.1 UTXO. How?
Well, the outside observer can see that if 0.1 BTC was merged, then 0.1 BTC must have entered the mix at some point. He/she then can look at all the UTXOs that entered the mixing phase that was 0.1 BTC or larger which narrows down the possibilities. With a small balance like 0.1 BTC, you can probably hide, but if you brought 100 BTC or 1000 BTC to the mix, and then rejoined them, it would be easy to detect that a 1000 BTC merge is linked to a 1000 BTC pre-mix.
So, in summary, it is safe to merge well-mixed balances as long as they are small so you can hide in the crowd.
Your pre-mix UTXO will send BTC to the mixing pool, but there will always be a small amount of change that doesn’t enter the mix. You need to never merge this “toxic” change as it can link your identity to mixed coins. Keep it separate, and wait for Samurai to come up with a solution that they are working on. Alternatively, you can merge these small UTXOs with other non-mixed UTXOs. That’s fine because they all have your identity “stamped” on them anyway. Just don’t make them touch your mixed coins.
Static Lightning Address: email@example.com