CoinJoin And Wallet Concepts

What Is CoinJoin

Bitcoin transactions are public. CoinJoin combines inputs from several owners into one transaction. In JoinMarket, each participant receives an output of the same amount, making several ownership mappings plausible to an observer. The transaction, amounts, and subsequent spends remain visible.

An input spends an existing UTXO (unspent transaction output). An output creates a new UTXO. Wallet balances are totals of these individual coins, not a single account balance held by a service.

Makers And Takers

A taker arranges a CoinJoin, chooses offers, and pays maker and mining fees. A maker advertises liquidity and signs a valid proposed transaction when selected, earning its offered fee. Neither role guarantees privacy or profit.

A tumbler automates a sequence of CoinJoins and waits, optionally taking both roles. It does not change the underlying custody or privacy limits.

Equal Outputs And Change

The equal-value outputs provide the main ownership ambiguity. Any remaining input value returns as change, after accounting for fees. Its distinct amount can make it easier to link to a participant. Treat change differently from a CoinJoin's equal output when deciding what to spend next.

Mixdepths

A mixdepth is a separate account within the same wallet. An INTERNAL CoinJoin moves the equal output to the next mixdepth while change stays behind; the last mixdepth wraps to the first. This separates coins with different histories.

Mixdepth numbers are not a count of CoinJoins or a privacy rating. Later consolidation, address reuse, or matching amounts can undo useful separation.

Why JoinMarket Is Different

There is no global coordinator choosing every round or holding participants' keys. Directory servers help peers discover and reach one another; each taker coordinates its own transaction. Tor protects network connections, while CoinJoin addresses links on the public ledger. Neither replaces the other.

Fidelity Bonds

A fidelity bond locks bitcoin until a chosen date. A maker proves control of it to make operating many apparently independent makers more costly. Takers can favor bonded makers, but a bond does not prove honesty or guarantee selection. The bond is public and can link its funding history to the maker.

Recovery Words And Passwords

The mnemonic is the set of recovery words from which a wallet derives its keys. An optional BIP39 passphrase changes those keys, so it must be backed up too. The wallet-file password only encrypts the local file. These are different secrets with different purposes; see backups and recovery.

Privacy Limits

An observer may combine public transactions with exchange records, timing, network observations, or knowledge gained as a participant. A CoinJoin adds ambiguity; it does not erase those observations. There is no universal number of rounds or participants that makes coins untraceable.

Read privacy practices before spending, or the threat model for the adversaries and assumptions in detail. For a deeper analysis of transaction graphs and privacy claims, read Collaborative Transaction Privacy.