What is a crypto mixer service and why would you consider using it?

Since the blockchain is visible, even if Bitcoin and other cryptocurrency addresses are technically pseudonyms, they may still be used to trace your identity to them. For instance, the exchange is aware that the withdrawal address belongs to you since you completed KYC with the exchange. Additionally, a specific bitcoin address may be connected to an individual using proper blockchain analysis. Collected data may be used to generate a data profile of certain addresses that reveals a wide range of individual data. For instance, depending on how cryptocurrencies are used, it is possible to discover how many coins a person holds (even across several addresses), what they buy with their money, and other details.

So, to sum up, Bitcoin or other cryptocurrency mixers are solutions (software as a service) to anonymize your funds with the funds of others to conceal the source of funds and safeguard the identity of the person sending the coins.

Is the use of a crypto mixer service safe?
Avoid sending bitcoin to mixer websites since the vast majority of them are scams. If you do want to use a mixer or tumbler, both of which are simply alternative names for the same thing, you can only do it safely if you run your own mixing software and retain control over your private keys. Here are some of those examples:

JoinMarket is software to create a special kind of bitcoin transaction called a CoinJoin transaction. Its aim is to improve the confidentiality and privacy of bitcoin transactions. You can find the software to download here. 

"Privacy isn’t about something to hide. Privacy is about something to protect. And that’s who you are. That’s what you believe in. That’s who you want to become. Privacy is the right to the self. Privacy is what gives you the ability to share with the world who you are on your own terms." 
- Edward Snowden

Is it illegal to use a crypto mixer service?

Should I use centralized or decentralized mixers?

Centralized mixers are companies that will accept your cryptocurrency and send back different coins. For this, they want a fee. The issue with centralised companies is that, although not being a matter of public record, they keep track of users' incoming and exiting transactions. Future regulatory developments may require this firm to hand up those records.

Decentralized mixers use protocols to completely obfuscate transactions via a coordinated or peer-to-peer method. The protocol enables a sizable group of users to pool a quantity of a certain cryptocurrency together and then redistribute it in a way that ensures everyone receives their cryptocurrency back without preventing any trace of who received what or where it originates. The more people in the pool, the harder it becomes for outsiders to resolve who got what and where it came from.

Are there any good alternatives for crypto mixer services?

You may think of using private cryptocurrencies, like Monero ($XMR), as an example. Monero uses one-time use "stealth" addresses and a combination of real and fake transaction signatures to mask the transfer of funds.

Other privacy coins offer optional private transactions that rely on so-called zero-knowledge proof (also known as ZK-snarks) algorithms for example, which don’t share transaction information. A zero-knowledge proof allows you to prove the truth of a statement without sharing the statement's contents or revealing how you discovered the truth. Example of some good cryptocurrency projects that uses ZK-snarks are Zcash ($ZEC) & Pirate Chain ($ARRR)

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