What are Coin Mixing and CoinJoin

Coin mixing and Coinjoin are two practical ways to eliminate traces of digital currencies. The nature of blockchain is to hide the information of transactions, which is done according to a relatively complex mechanism. But despite these complications, it has many advantages, the most important of which is the protection of users’ privacy in cryptocurrency transactions. Thus, many users use various methods to ensure that involved parties in a transaction remain anonymous.

What is coin mixing?

Any activity that obscures the number of transaction funds by replacing them with others is called coin mixing. This method vaguely shows people’s assets while a third party plays an important role. that is to say, the working method in Coin Mixing is not decentralized.

How does Coin Mixing work?

In coin mixing, a third party or service provider takes the user’s coins, replaces them with coins that bear no resemblance to the original coins, and returns the replaced coins to the user. Therefore, it mixes the coins so that no traces of the receiving coins are found in the sent coins. But is this method safe? Are transactions done anonymously in a centralized mechanism?

There is no security guarantee in this method. Also, no guarantee regarding the return of coins by Mixer can be provided to users. However, third parties may log IP addresses and addresses of major coins because users have entrusted them with control of their assets.

What is Coinjoin?

Coinjoin, which was introduced in 2013, is also a tool to hide the traces of transactions in the cryptocurrency world. Using the Coinjoin method, no documents are left in the transactions, and as a result, the user’s address is not revealed by making the transaction. Coinjoin is an alternative to centralized mixers that uses a decentralization method, although there may be a coordinator in between. In this method, users have control over their property and do not hand it over to a third party. The main thing in Coinjoin is that inputs are combined into one transaction.

How does Coinjoin work?

In this method, several people coordinate to create a transaction. Each one provides arbitrary inputs and outputs and since all inputs are merged it will be impossible to relate each output to its user. For example, 4 people intend to make a transaction with privacy protection. These people coordinate inputs and outputs while the coordinator takes all the information and puts it into a transaction. Here people should sign with their digital signature, which then makes the transaction irreversible, and the transaction will be done in the network.

Therefore, there is no risk in this method since the coordinator neither can manipulate the information nor steal the cryptocurrencies. It can be said transactions are, so to speak, a black box for mixing digital currencies.

Protect privacy using Coin Mixing and Coinjoin

With the increasing popularity of the Coinjoin method, it is believed that many transactions will be done with the Coinjoin method. This makes a big move in this ecosystem to protect the privacy of users. With Coinjoin, dozens of users can easily combine their inputs into one transaction to make them harder and harder to track.

What users can use Coin Mixing or Coinjoin?

The coin mixing method is very important for any user who wants to maintain privacy in their transactions. Coin mixing tools are compatible with protocols. So, for people who trust the existence of a third party in transactions, the coin mixing method is easy. But some people prefer a verifiable and non-committal alternative that is better to use other methods such as CoinJoin. In CoinJoin, a third party does not have the involvement and authority of the asset, but there may be a coordinator to carry out the transactions. Of course, with the existence of a coordinator, the ownership of assets will be in the hands of the users themselves.

Final point

Coin Mixing and Coinjoin are tools for merging coins and making transactions while maintaining the privacy of the users of those transactions. People who believe in honesty and a third party in transactions will welcome Coin Mixing while those looking for more confidential and private options will enjoy Coinjoin. Anyhow, to carry out each of these processes, it is better to get help from professionals and experts.