What is PayJoin and why Does it Matter?

CryptoMode Exchange Reserves Bitcoin PayJoin

One of the more interesting concepts in the blockchain world today is PayJoin. It is a variant of the CoinJoin transaction type, but with better privacy properties. An interesting option for those worried about the transparent nature of their Bitcoin transfers. 

PayJoin has Some Potential

Although the concept of PayJoin is not new, most people will have never heard about it.

The main purpose of PayJoin is to introduce some degree of privacy when completing Bitcoin transactions.

At its core, this solution is built for two parties directly making transactions with one another.

There are no distinctive multiple outputs with the same value, whereas an equal-output CoinJoin shows identical outputs. 

With no common-input-ownership-heuristic in place, there is a small improvement in the privacy department. 

In fact, it becomes nearly identical to more traditional Bitcoin transfers, removing any hint of using a specific transaction type.

Analyzing such transactions will see senders and receivers spend money from their wallet. In the case of the receiver, they are sending extra coins to themselves. 

The main reason for PayJoin to exist is to throw off blockchain analysis firms.

These firms often rely on the common-input-ownership-heuristic to identify and flag transactions and the participating users.

Finding a solution to completely nullify these efforts will always be of great interest to a lot of people. 

BlueWallet has already integrated PayJoin support, which is known as Bitcoin Improvement Proposal 78. 

It may be a matter of time until other wallet solutions integrate PayJoin in the future.

The same goes for Bitcoin payment processors. 

BTCPay Server, for example, also has a built-in Payjoin solution. A guide to using this feature can be found here

This feature can be beneficial to merchants and customers alike, although setting it up requires a minor bit of effort. 

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