Privacy in Bitcoin: why CoinJoin and PayJoin are not for cri…

How CoinJoin and PayJoin protect the financial freedom of all Bitcoin users.

Privacy does not mean anonymity. Privacy represents the fundamental right to be able to selectively choose with whom to share certain information. When we talk about money, it also means defending one’s financial freedom from prying eyes, whether they be private companies, governments, or malicious actors.

Bitcoin, often mistakenly considered “anonymous,” is actually pseudonymous: every transaction is public and permanently recorded on the timechain. The problem emerges when your identity is linked to your Bitcoin addresses, creating a complete profile of your financial activities.

Every time you purchase bitcoin on a centralized exchange, you create a permanent link between your identity and your funds. KYC (Know Your Customer) procedures associate your personal data with the Bitcoin addresses used for withdrawals.

This link allows anyone with access to the exchange’s data to track all your future transactions. It’s as if every banknote you use carried your first and last name printed on it.

The solution to this problem lies in technologies like CoinJoin and PayJoin, tools designed to break these links and return control over their financial privacy to users.

CoinJoin is a technique that mixes your bitcoin with those of other users, making it very complicated to track who owns what. Imagine pouring hundreds of identical coins into a large bag together with other people: once mixed, it becomes practically impossible to determine which coin originally belonged to whom.

From a technical standpoint, a CoinJoin is a collaborative transaction in which multiple participants combine their own inputs to create a transaction with similar or identical output values. The result is a break in the traces that connect bitcoin to their previous history.

Wasabi Wallet represents one of the most intuitive solutions for performing CoinJoin. Using the WabiSabi protocol, the wallet offers completely automatic mixing with variable amounts, applies no fees of its own – only mining fees remain – guarantees communications exclusively through Tor, and adopts a “trustless” protocol that prevents the coordinator from stealing funds.

The system is designed to be completely autonomous: the user configures the mixing strategy and the software works in the background. The closure of the official zkSNACKs coordinator in 2024 led to the emergence of independent coordinators like Kruw.

Whirlpool is reborn from the ashes of Samourai Wallet through the Ashigaru project and makes available fixed pools of 0.25 BTC and 0.025 BTC to standardize outputs, a 5% anti-Sybil fee paid only once at entry, unlimited free remixes to expand the anonymity set, and a two-phase system consisting of a pre-mixing transaction (Tx0) followed by the actual rounds.

The new system eliminates dependence on Dojo nodes, using an Electrum server as backend and ensuring that the development team has no access to users’ public keys (xpub).

JoinMarket, launched in 2015, remains the most decentralized solution available: its maker-taker model creates a true market for privacy, in which makers provide liquidity and earn fees, while takers initiate CoinJoins by paying market fees. The system is completely peer-to-peer, without any central coordinator, and integrates fidelity bonds, a reputation mechanism designed to prevent Sybil attacks.

Although it requires greater technical skills, JoinMarket offers maximum control, making it the preferred choice for more experienced users. In recent years, user-friendly graphical interfaces like Jam have also emerged to be able to use the protocol simply.

In a PayJoin transaction, both the sender and the recipient contribute with their inputs to the same operation, creating a transaction that appears normal on the timechain but which actually confuses external observers. The amounts of outputs visible on the timechain do not necessarily reflect the real value of the payment made. The advantages are twofold: greater privacy for both parties and reduced fees thanks to input sharing. The strength of PayJoin lies in the fact that a transaction is indistinguishable from a normal transaction, making its identification through blockchain analysis impossible.

Not all exchanges treat privacy the same way. The Canadian broker Bull Bitcoin, known for being strictly non-custodial and Bitcoin-only, has adopted a different approach in managing user data. The platform does not send any email communications regarding the purchase or sale of bitcoin. The collected KYC data is kept exclusively in-house through self-hosted systems and is never shared with third parties, advertising agencies, governments, or tax authorities, except in the presence of a formal court order. Furthermore, the broker has developed open-source software that allows sending and receiving bitcoin on-chain via PayJoin.

As stated by Bull Bitcoin CEO Francis Pouliot:

Privacy is a fundamental human right. In the digital age, financial privacy tools become essential to preserve individual freedom.

Considering the use of CoinJoin or PayJoin as “suspicious” is equivalent to considering the use of curtains on windows or envelopes for letters suspicious. Privacy is a prerequisite for freedom, not an obstacle to legality.

The implications go well beyond Bitcoin: in an increasingly surveilled world, privacy-focused tools represent technological bulwarks against the erosion of financial privacy. They protect dissidents in authoritarian regimes, investigative journalists, whistleblowers, and ordinary citizens who simply want to keep their financial matters private.

Bull Bitcoin is the world’s longest-running Bitcoin-only exchange. Strictly non-custodial. Try it here.

The post Privacy in Bitcoin: why CoinJoin and PayJoin are not for criminals appeared first on Atlas21.

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