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CoinJoin

CoinJoin is an anonymization method for bitcoin transactions proposed by Gregory Maxwell in 2013. The following idea is behind CoinJoin: “When you want to make a payment, find someone else who also wants to make a payment and make a joint payment together.”” In this scenario, the exact flow on money movement from the sender to the receiver will remain unknown to a third party, and difficult for an investigator to relate inputs and outputs.

CoinJoin transactions are often coordinated by a Join Market, where people who want to mix coins come together and initiate a single large transaction will all of their coins. The resulting transaction distributes coins randomly to each participant according to the amount they submitted, minus a transaction fee. For example, if four users input 2, 4, 6 and 8 BTC for a total of 20 BTC, the CoinJoin transaction would create 20 separate outputs each worth 1 BTC. The outputs would be apportioned to each user in the same amounts they originally contributed. Since every output has the same value, it should be impossible (in theory) to immediately discern which of the new bitcoin addresses are now controlled by each of the original four users. (Example source: https://www.fraudinvestigation.net/cryptocurrency/tracing/mixers-and-coinjoin).

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