[aeturnum]

Yes - mostly. The idea behind a mixer is this:

1. Your transaction goes into their address

2. Their address is always transferring money to accounts.

3. Sometime after you pay them, some amount, not quite the same, leaves their address to an address you control, but which has no established connection to you.

So an observer can see:

1. That you put money into the mixer.

2. The full list of addresses the mixer payed 'out' to (very long).

Which allows them to say if an address has "mixed" money but not to determine which account is connected to which person. If you're careful and you don't transfer any coins to addresses linked to your 'real world' persona, it becomes difficult to trace the account containing the 'mixed' coins to you (though trivial to identify it as coming from the mixer).

[the_stc]

A well designed mixer would not be so easy to detect. In a perfect world, you'd have matching clients all the time, and the only contamination is the fee being siphoned off. If the fee is managed well it could be very difficult to determine coins that went or came from the mixer.

In reality, you probably need to batch a few customers together: 10 customers putting in 1 BTC, 1 customer putting in 10. But these don't need to be long-lived groups, if the mixer has the volume. So "their address" would only be the same for a few customers. An attacker would need to constantly make transactions to determine the addresses involved.

Most mixers give you completely "clean coins": That is there's no transaction chain from your inputs to your outputs. So they are probably doing some sort of system similar to what I describe.

[jacquesm]

The proper term for this kind of activity is money laundering.