CoinJoin is a Bitcoin mixing service that allows users to combine their transaction outputs into a single transaction, making it harder for third parties to track and link the original sender’s addresses and funds flows. As a result, CoinJoin provides increased privacy and security for users in an increasingly digitized world.
How does it work?
When participating in CoinJoin, you’ll need to have a wallet with a good coin control strategy (keeping different wallets for purchases, savings, etc.) as it’s possible that a CoinJoin will leave some coins unaccounted for in your wallet. This can then be flagged or tainted by analytics surveillance services such as Chainalysis and may make it harder for you to sell those bitcoins on an exchange or via merchants.
Another concern is that the CoinJoin process relies on software trust to successfully and privately complete transactions. As such, there is a risk that the software could be hacked or compromised by malicious actors.
One additional consideration is that CoinJoin transactions are significantly larger in size compared to regular Bitcoin transactions due to the need to perform “mix jumps.” This can lead to higher transaction fees.
In addition, using CoinJoin can lead to a higher number of new address keys being created in your wallet. This can cause your wallet to start running low on space and trigger a warning message. This is a common issue that can be easily avoided by backing up your wallet before and after participating in a CoinJoin process. CoinJoin