What is CoinJoin?

¿Que es coinjoin?
5 min read

The crypto world moves so fast that many times some important concepts like what is CoinJoin get in the way. Therefore, from Bitnovo we decided to create an exclusive article to explain it.

“Coinjoin” might be a good name for one of the games to win bitcoins, but the reality is that it refers to something completely different.

Coin means currency.
Join means to join.

The result is CoinJoin, a method of joining different Bitcoin transactions from multiple people into a single transaction.

For what? Once those transactions are unified, it is more difficult to determine where those funds are coming from. With Coinjoin, not even the receiver of the transaction will be able to determine the origin because they will not have the possibility to see or associate the entries and exits of the transactions.

This is especially useful in currencies like Bitcoin, which while private is not 100% anonymous. If someone wanted, they could cross-link data from digital profiles and analyze movement data, to determine a certain identity associated with a transaction.

Therefore, it is important to know what CoinJoin is and how it can be used.

How to use a CoinJoin?

To use CoinJoin it is essential that you have a wallet that has the ability to do so, and although there are many today we are going to talk about how to do it using Samourai Wallet.
 
Samourai is a wallet focused on mobile devices and one of the most chosen by Bitcoiners as it has many tools that improve privacy and is also incredibly easy to use.
 
Also unlike other wallets that require a minimum amount to make Coinjoin (limiting users with low balances) Samourai Wallet allows you to do it with only 0.005 BTC.

Steps to follow:

– Start Samourai Wallet
You download the app on your smartphone and create a new wallet from the application. Remember to store your safety seed safely.
 
– Select Whirlpool
Whirlpool is the version of the CoinJoin protocol from Samourai Wallet and to start using it we must click on the + button in the lower right corner and then select “Whirlpool” from the drop-down menu.
 
– Whirlpool interface
Once the option is chosen, we will find ourselves in the Whirlpool interface where we will take the balance we need to make a Coinjoin transaction.
 
Now we click on the tornado icon and choose the option “mix UTXOs”. And then we select each UTXO to mix.
 
– Priority
There are different types of priorities to perform the Coinjoin, with different fees to pay depending on the speed of the process. The faster the speed, the higher the fee and the shorter the mixing time.
 
– Wait
 Now we can only wait for the mix to take place, which with average commissions can take an average of 1 to 2 hours.
 
– Payment
Finally the CoinJoin has been made and now we can make much more secure payments. We just have to click on “Spend Mixed UTXOs”.

 

¿Que es coinjoin?

Pros of using CoinJoin

– Helps to improve crypto privacy.
– We do not need changes in the protocol to make a Coinjoin.
– It maintains the compatibility of Bitcoin with other clients without problems.

Cons of using CoinJoin

– Making a coinjoin can mix our transactions with others that come from illicit activities.
– The process is not that simple yet for a user new to the crypto world.

Is CoinJoin 100% anonymous?

It is not appropriate to say that CoinJoin is 100% anonymous, since even carrying out this process, data analysis could be done to identify identities. What is true is that it greatly improves the privacy of Bitcoin and other cryptocurrencies. So unless you’ve committed a very serious crime and have the FBI in your wake, you shouldn’t worry too much.

Now that you know what CoinJoin is, you can add a nice layer of privacy to your Bitcoin transactions. If you are a person who really values ​​privacy, you will surely find many more useful articles on our blog.