How Does the “CoinJoin” Technique Leverage UTXOs to Improve Anonymity?
CoinJoin is a technique where multiple users agree to combine their separate UTXOs into a single large transaction with multiple inputs and multiple outputs. All participants pay the transaction fee.
Crucially, the outputs are intentionally indistinguishable, making it impossible for an outside observer to link a specific input UTXO to a specific output UTXO. This breaks the common-input-ownership heuristic, significantly improving the anonymity set for the participants' funds.
Glossar
Anonymity Set
Concealment ⎊ Anonymity sets, within cryptocurrency, represent the group of participants whose transactions could potentially be linked to a given address, impacting traceability.
UTXOs
Ledger ⎊ Unspent Transaction Outputs (UTXOs) represent a fundamental concept in blockchain technology, particularly within cryptocurrency systems like Bitcoin, serving as the building blocks for transactions.
CoinJoin
Combination ⎊ CoinJoin is a specific transaction structure that combines inputs from multiple distinct users into a single, large transaction where the outputs are mixed.