This makes it more difficult to work out which spender paid which recipient or recipients. This means you’ve got a privacy solution without modifying the Bitcoin protocol.
Coinjoin requires multiple parties to jointly sign on an agreement to mix their coins when doing Bitcoin transactions.
Although conducting transactions with Bitcoin is secure, it is not necessarily anonymous.
Every Bitcoin transaction is recorded on a ledger known as a blockchain which is publicly available.
Each computer that is connected to the Bitcoin network (known as nodes) has a copy of the blockchain. The blockchain records information such as addresses of the users and their balances.
Due to the transparent nature of Bitcoin transactions, an entity can use the information recorded in the public ledger, like the IP address to unveil the identity of the users involved in a transaction, and the type of transaction that was conducted.
The address a Bitcoin is sent from is called the input. An output is where the Bitcoin is sent to.
Someone could potentially identify a user by looking through the Blockchain and finding the input.
CoinJoin allows users to combine inputs and outputs and record it as one transaction.