What Is PayJoin?
PayJoin (also known as P2EP - Pay-to-Endpoint) is a privacy-enhancing Bitcoin transaction type where the receiver contributes one of their own UTXOs as an additional input to a payment. This breaks the common input ownership heuristic while looking like a normal transaction on the blockchain.
Two-Party Collaboration
Unlike CoinJoin which requires coordinating many participants, PayJoin only involves the sender and receiver. The receiver contributes an input to the payment transaction, making it impossible for observers to determine the actual payment amount.
Advantages
Stealth Privacy
PayJoin transactions look like regular transactions with no distinguishing characteristics. This provides privacy without drawing attention, unlike larger CoinJoin transactions that are more visible.
UTXO Consolidation
Receivers can use PayJoin to consolidate their own UTXOs while receiving payment, optimizing their wallet efficiency. This turns a received payment into an opportunity for free UTXO management.
PayJoin is defined in BIP 78 and supported by increasing numbers of wallets. It requires coordination between sender and receiver but offers superior privacy with minimal overhead. The technique breaks chain analysis assumptions while maintaining plausible deniability through normal-looking transactions.
Quick Facts
- •Also known as P2EP (Pay-to-EndPoint)
- •Breaks common input ownership assumption
- •More efficient than traditional CoinJoin