What is a CoinJoin?
A payment made together by several people, which breaks the easy link between their old and new addresses. Nobody gives up their coins.
Several people combine their inputs in one transaction and take the same amounts back at fresh addresses they each control. From outside, it is no longer obvious which output belongs to which input.
The result is an ordinary, valid Bitcoin payment; nobody deposits coins with anyone. How much privacy it gives depends on the amounts, the number of people and what each does afterwards. Gregory Maxwell proposed the idea in 2013.
References
- Gregory Maxwell, BitcoinTalk, “CoinJoin: Bitcoin privacy for the real world”.