You will need Tor. Tor is an open-source anonymization network.
A short overview of Tor Project.
For easy setup: Tor Browser bundle
When you are done setting up tor, simply go to this address: http://foggedddxlunnaaa.onion
You can also track all the latest Bitcoin Fog news and warnings about hypothetical downtime or disturbances of the service operation on our twitter: twitter.com/BltcoinFog
The website you are currently browsing is just an information page about how to access the real thing. Bitcoin fog is not hosted on the same server and can only be accessed through Tor. The clearnet gateway does not have any sensitive information, and hacking or seizing it will yield nothing except perhaps it's service termination. All the sensitive data is kept in the hidden service, which will be operational no matter what happens to the gateway.
The bitcoin network might be anonymous in terms of single-handedly revealing your ip address, but the transaction history is recorded in the block chain and is publically available, which makes your anonymity very vulnerable. Once the interested parties, be it authorities or just interested researchers (http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html) have acquired any one of your addresses or transactions, they could easily track your money around the network.
And knowing your transaction history, connecting your bitcoin addresses to real you is possible, because you will at some point need to exchange your bitcoins to or from a fiat currency using a bank account number, a credit card, LR account or similar service which is much less anonymous than the bitcoin network.
We are providing a solution for this: using our service you mix up your bitcoins in our own pool with other users' bitcoins, and get paid back to other addresses from our mixed pool, which, if properly done by you can eliminate any chance of finding your payments and making it impossible to prove any connection between a deposit and a withdraw inside our service.
You register an account on our website and deposit bitcoins to the designated address. After a couple of network confirmations, your money is registered on your Fog account, and you can schedule withdrawals. Each withdrawal will be split in a random number of payouts, depending on the amount, and the relative size of each payout will be randomized as well. Even the timing of those payouts will be randomly spread out over a period of time you will specify.
Ideally you should deposit an amount of bitcoins to the Fog, wait some time (for amounts above 100BTC we recommend a day, above 300 BTC a couple of days, about a week for 1000BTC, etc.) and request a withdrawal, which will not have the same amount as the original deposit, leaving some funds in the Fog.
Then you should deposit another batch of bitcoins and withdraw yet another amount, again different from the amount you have deposited. This time it can be lower than deposited, or higher, adding the funds you have left from the previous deposit. This way there is no practically reliable way to do statistical analysis on the block chain and link your deposits to your withdrawals.
You should understand that in bitcoin there is no “your” or “mine” bitcoins, nor are there “same” bitcoins. They are all just numbers. Whatever transaction you will get back from us will be just a number of bitcoins transferred to your address, not “marked” in any way.
A link could be made if you would get paid from the same address that you have deposited bitcoins to. This is not the case with Bitcoin Fog. The money you deposit actually stay on the random initial address we generate for you. Only when our main account is running low, do we transfer the money from your deposit address to the main pool. That way, you may get a payout from the pool, while your original money is still sitting on the random initial account, not linked to your payout anywhere in the block chain. Since it is just a bitcoin address like any other, there is no way to even see that you have deposited money to Bitcoin Fog, and not to a random account you have generated yourself. (Until the pool runs low and transfers your original money.)
Even if you waited long enough time for your money to be transferred to the pool, there is still no reliable way to see that it was your original transfer that is the source of your payout, since it is mixed with other users' transfers.
Another thing to consider is the amount of your withdrawal. If you transfer 1.382 to us, and the next day you withdraw ~1.38 bitcoins to another account, those amounts will be visible in the block chain, and unless there were 10 other people that day that also withdrew just 1.38 bitcoins, the link between your deposit and your withdrawal will be pretty obvious. You will still have plausible deniability, since nobody else has access to our servers and can actually prove that those bitcoins came from your account, but the link will be found nevertheless.
This is why you should ideally never withdraw the same amount as you have deposited. We are already helping you to do this by transferring your money to you in multiple randomized payouts at randomized times (and optionally to different addresses), but to be sure you should withdraw to multiple addresses and different amounts than the one you have deposited. Also make sure to change your deposit address every now and then to further anonymize your payments.
There have been a couple of similar services before, and as we see it, the problem with most of them was that they were not professional enough, not secure enough, and not taken seriously, thus becoming subjects to easy hacking and other problems. (mybitcoin, blindbitoin, etc.) We on the other hand, are here for the long run. Our team consists of professional secure web application developers with 5-10 years experience, and we have built this solution from scratch with security being our number one concern. We strive to be a mixing service that just works and does not loose it's private bitcoin keys due to poorly configured backups or because of someone hacker attacks on another sites from the same shared hosting, or because of any other silly reason.
The service is run on a dedicated server manually configured for this very purpose, which does publically connected from the internet (not needed if using Tor). Bitcoin daemon is run on another machine, and all suspicious activity is monitored and the website shuts down automatically if it even senses it is under attack. It is manually monitored and checked on a daily basis.
For security purposes, the service operates through the Tor network only. You can be sure your data is processed securely and only by our server if you use our .onion address. On the other hand, this also makes us feel more secure, knowing that we will never be found and dealt with by proper authorities. (Even if Tor network would be compromised, we have taken all the necessary precautions to still stay hidden.) This is better for you as well; while a clearnet service may swear on not cooperating with authorities in case they show up at their homes, we can say with high certainty that not only will we not cooperate with any authorities, the authorities will not actually be able to show up at our doorstep, because finding a tor doorstep has proven difficult.
With a service like ours it will always be an issue of trust of course, but we can ensure you that the service will continue to operate, simply because of all the time and effort we put into building it, debugging it, setting it up at a secure location, etc., which makes it simply not worth for us to run away with a couple of hundred bitcoins which is collected at the initial phase. As the time will pass, you will see that our service will undergo changes and improvements, which someone who wanted to hit-and-run also would not do.
And once again, running through Tor makes it not likely for us to be shut down under pressure from the authorities. When in doubt about this, consider Silk Road.
Of course, we are still going to have to earn your trust. We suggest you trying the service out with small amounts, and increasing slowly as time goes.
We keep logs for 1 week for debugging and troubleshooting purposes. After that they are automatically deleted. ALL logs are taken care of. Even the bitcoin client we use is purged every week, starting with a fresh installation of only the block chain, and importing all the addresses we need at that point automatically. That way, if you have received a payment from us a month ago, not even the address will be left on our server. If any service tells you that they don't keep any logs at all, they are most probably lying, becauase when clients come asking for funds they think are missing, not having any history is like turning our backs on them and not being able to provide any support.
The service takes 1%-3% (randomized for obscurity) fee on each deposit. No other fees are in place, no complex calculations based on the number of withdraws or similar.
Minimum withdraw amount is 0.035 BTC.
We do wait for 6 network confirmations on all deposits to prevent double-spending.