Opinion: CoinJoin will not replace bitcoin mixers

In April 2023, SatoshiLabs integrated the CoinJoin transaction mixing technology into the Trezor Model T hardware wallet.

How effective is it and will it push centralized services out of the market to maintain on-chain anonymity? We answer these questions together with the Mixer.money bitcoin mixer team.

CoinJoin is a bitcoin transaction anonymization technology proposed in 2013 by Bitcoin Core and Blockstream developer Gregory Maxwell.

The algorithm mixes the bitcoins of several users, and then divides them into equal shares and sends them to the recipients. As a result, the third party cannot reliably identify the participants in the transaction.

The popularity of CoinJoin is facilitated by integration into large wallets like Wasabi, Samourai and Trezor. However, Mixer.money believes that it is also affected by the “legal” image of the technology:

“CoinJoin blocks dirty bitcoins and ensures that participants in the transaction receive clean coins. At the same time, it does not verify recipients, which means users can send funds to sanctioned wallets.”

The algorithm is decentralized and secure, but does not provide complete anonymity. Senders and recipients are recorded in the blockchain, which means they can be identified using on-chain analytics tools:

“Back in 2016, the Neutrino blockchain monitoring service published a transaction snapshot of the JoinMarket mixer based on CoinJoin, where it determined the transaction amounts, used exchangers, and even the geographic location of the participants in the transaction.

A year ago, the speakers of the Association for Computing Machinery (ACM) conference proved that CoinJoin is not suitable for reliable anonymization of transactions,” comments Mixer.money.

Service representatives also draw attention to a significant limitation when using CoinJoin:

“The algorithm is effective only with a large number of participants in the transaction. You have to wait for other users to join you, or involve third-party people, thereby risking a violation of anonymity“.

According to Mixer.money, at the moment, only centralized mixing services can ensure complete anonymity of transactions in the Bitcoin network:

“The algorithms of the classic mixers were like CoinJoin – they just mixed user funds.

Modern services provide advanced mixing modes like our “Total Anonymity” where clients receive pure coins from major exchanges. So the mixer really breaks the connection between the sender and recipient addresses.

Moreover, if you accidentally received dirty coins, you will not be able to clear them in CoinJoin due to the scoring of incoming transactions. In this case, only a centralized mixer will help.”

Mixer.money is a bitcoin cleaning and wallet anonymization service that uses major crypto exchanges as a source of pure cryptocurrency.

Previously, the Mixer.money team explained why the Tornado Cash case cannot be applied to Bitcoin mixers.

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