PayJoin

PayJoin is a specialized type of Bitcoin transaction designed to enhance user privacy by involving both the sender and the recipient in creating the transaction's inputs. Unlike traditional Bitcoin transactions where only the sender provides inputs, PayJoin allows the recipient to add their own inputs alongside the sender’s. This collaboration obscures the typical transaction patterns that blockchain analysts use to trace the flow of funds.

By breaking these common assumptions—for example, that all inputs belong solely to the sender—PayJoin transactions significantly complicate blockchain analysis and reduce the chances of linking addresses or identifying payment amounts. This makes it much harder for external observers to determine the true nature of the transaction. For instance, when Alice pays Bob using PayJoin, both parties contribute inputs, effectively blending their funds and masking the actual payment amount.

Beyond privacy, PayJoin transactions also help mitigate the risk of common blockchain heuristics used for tracking, such as the "common input ownership" assumption. This technique is increasingly popular in privacy-focused Bitcoin wallets and services, reinforcing transactional confidentiality without requiring complex technologies like CoinJoin. Overall, PayJoin represents a practical and efficient approach to enhancing the privacy of everyday Bitcoin payments.