While your personal identity is not revealed, your Bitcoin address is always identifiable and traceable.
Ultimately, blockchain operates with an unprecedented level of transparency, with all Bitcoin transactions openly and permanently stored on the public ledger. Therefore, it is relatively easy for anyone to monitor where bitcoin came from, where it's going, and how much is being transferred.
For many Bitcoin DeFi users, transacting with a higher degree of privacy is essential to their activity on-chain.
JoinMarket is a way to do so.
What is JoinMarket?
Joinmarket is a peer-to-peer system that allows users to increase the privacy and fungibility of a Bitcoin transaction through a process called "CoinJoin."
In a typical Bitcoin transaction, a sender transfers a specific amount of Bitcoin to a recipient, with this event being recorded on the blockchain. However, with CoinJoin, multiple users' transactions are mixed together into a single transaction, making it difficult to determine the origins and destinations of funds. This is accomplished through the creation of a market for "CoinJoin services," where users can offer to add their transactions to a CoinJoin mixer in exchange for a fee.
The Joinmarket protocol requires both facilitators (called market makers) and clients (called market takers). Market makers are responsible for creating CoinJoin transactions, while takers are responsible for actually participating in the CoinJoin process.
Market makers must stake collateral in the form of BTC to prove they are financially responsible, which guarantees that the liquidity providers will follow the protocol's rules. This process is automated through a bot, known as a “yield generator”, which performs the market-making. On the other side, market takers will communicate with the bot when they request a CoinJoin. For their contributions, market makers are rewarded with the fees takers pay to JoinMarket.
There are multiple features that make JoinMarket transactions differ from standard Bitcoin transactions.
Joinmarket increases Bitcoin privacy by combining many individuals’ transactions, which in turn make your funds indistinguishable. While Bitcoin’s Taproot upgrade brings a boost to the network’s privacy, JoinMarket and CoinJoins still provide an extra element of confidentiality.
One of the main advantages of Joinmarket is that it permits holders to maintain full control over their private keys throughout the CoinJoin process. This prevents loss of funds, or for bitcoin to be spent without a user’s permission.
Joinmarket does not rely on a centralized intermediary, which means that it is resistant to censorship or central hacks. Instead it uses a network of independent market makers that maintain the market in a trustless manner. The project is completely open-source, and maintained by a community of independent developers
JoinMarket users can choose the level of privacy and the size of the CoinJoin transaction they wish to mix their bitcoins together with. There is a vast range of CoinJoin market makers who offer varying fees and degrees of anonymity.
Joinmarket's interface, like many other Bitcoin privacy tools, can be challenging to use for non-technical users. The software is very complex, with some developers having struggled to put forward a user interface (UI) that is simple and intuitive.
Currently, there are a few interfaces to run JoinMarket with.
Joinmarket-Qt is a graphical user interface (GUI) application which lets users create wallets and initiate CoinJoins. The software is compatible with multiple platforms, including Windows, Linux and macOS.
JAM (Joinmarket Automation Market), is an open-source web UI that allows for participation in CoinJoins without the need to understand the underlying technical details. It also aims to make the process more user-friendly by eliminating the need to manually create and sign transactions, as well as by providing a simple fee structure and clear transaction history.
AndOTP is a mobile application for accessing Joinmarket through their mobile devices. It is designed to increase convenience of creating and taking part in CoinJoin transactions. Built for Android devices, users have the ability to generate and store private keys and seed words securely through the Android keystore.
Coinjoin and confidential Bitcoin transactions can be implemented in a few different ways, with some methods being more complex than others. If JoinMarket is too complex or inaccessible, there are a few options that perform similar functions.
Samourai Wallet is a digital wallet that includes a CoinJoin implementation called Whirlpool. Whirlpool uses a process that is similar to Joinmarket, but with some additional features to improve privacy through unique transaction mixing techniques.
Wasabi has a noncustodial Bitcoin wallet that implements a trustless CoinJoin running on the Tor network. It utilizes client-side block filtering and its own anonymous credential scheme, WabiSabi, to increase the privacy of transactions.
One of the main Bitcoin layers, Liquid Network is a platform for asset issuance and confidential transactions on the Bitcoin network. The Liquid protocol hides both the type of assets and amounts being transacted, which makes these details unviewable by any third parties. Liquid Bitcoin (L-BTC) can be transferred to the Liquid sidechain from the Bitcoin mainchain through a process known as a peg-in, or through a cryptocurrency exchange.
Protecting your Privacy on the Bitcoin Network
In conclusion, Joinmarket is a powerful privacy-enhancing tool for Bitcoin that allows users to increase the security and fungibility of their transactions. CoinJoins are an important innovation that will continue to evolve for the Bitcoin network as the technology advances and user experiences improve. While the software does have some limitations, such as accessibility and ease of use, it is beneficial to anyone looking for extra security measures on their Bitcoin transactions.
To learn more about JoinMarket, visit the JoinMarket GitHub.