Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What is true about transactions made by a decentralized Bitcoin cryptocurrency mixer?

1. All transactions are manually mixed

2. All transactions are transmitted privately by default

3. All transactions are conducted jointly between participants

4. All transaction participants are considered trusted

The correct answer is: All transactions are conducted jointly between participants

The assertion that transactions made by a decentralized Bitcoin cryptocurrency mixer are conducted jointly between participants holds true because such mixers operate by pooling together funds from multiple users. This method enhances privacy as it obscures the trail of individual transactions, making it difficult to associate any specific Bitcoin address with a particular user. In this system, transactions are indeed executed collectively, facilitating a mixing process that blends the inputs and outputs of various users’ funds. This characteristic is foundational to the operation of decentralized mixers. Participants share their transactions and combine their inputs, leading to a communal output. This joint transaction process is what helps to enhance the anonymity of users’ Bitcoin holdings. In contrast, the other options do not accurately align with the functionality of decentralized mixers. Transactions are not manually mixed, and although privacy is enhanced, it may not always be transmitted privately by default. Furthermore, the participants in a decentralized system are not inherently considered trusted, as the nature of decentralization implies that users might not have prior knowledge or trust in one another. Thus, the participation in the mixing process does not assume trust between users.