furio on Nostr: ### Step 1: **Participants come together** - Imagine we have Alice, Bob, and Carol. ...
### Step 1: **Participants come together**
- Imagine we have Alice, Bob, and Carol. They each want to send some Bitcoin, but instead of making separate transactions, they agree to create a **single CoinJoin transaction**.
- They don’t trust each other completely, so this has to be done in a way where no one can cheat or steal anyone’s funds.
### Step 2: **Transaction construction (inputs and outputs)**
- Each participant starts by preparing the **inputs** (the Bitcoin they own) and the **outputs** (the addresses they want to send their Bitcoin to).
- For example:
- **Alice** has an input of 1 BTC and wants to send 0.5 BTC to an address.
- **Bob** has an input of 2 BTC and wants to send 1 BTC to an address.
- **Carol** has an input of 3 BTC and wants to send 1.5 BTC to an address.
- **Inputs** are essentially references to the Bitcoin each person owns, which they’ll be spending. These inputs are Unspent Transaction Outputs (UTXOs) from earlier transactions.
### Step 3: **Coordinator role**
- To organize the CoinJoin, there’s usually a **coordinator** (could be software or a server). The coordinator does *not* handle the coins, just helps collect the necessary information from each participant to build the transaction.
- Each person privately sends their input (UTXOs) and output (the address they want to send Bitcoin to) to the coordinator.
- **Crucial detail**: The coordinator sees which inputs belong to which participant, but it doesn’t need to know who’s sending the Bitcoin in real life.
### Step 4: **Building the transaction**
- The coordinator gathers all the inputs and outputs from Alice, Bob, and Carol and combines them into a single transaction.
- The transaction looks like one big pool of inputs and outputs:
- Inputs:
- Alice’s 1 BTC
- Bob’s 2 BTC
- Carol’s 3 BTC
- Outputs:
- Alice’s destination address for 0.5 BTC
- Bob’s destination address for 1 BTC
- Carol’s destination address for 1.5 BTC
- Since inputs are larger than outputs (because no one sends all their funds), the rest is returned as **change** to new addresses controlled by each participant.
### Step 5: **Signing the transaction**
- Now, each participant must **sign** the transaction. Here’s how:
- Each person only needs to sign the part of the transaction that involves **their own inputs** (the coins they control).
- **Alice** signs the input associated with her 1 BTC.
- **Bob** signs the input associated with his 2 BTC.
- **Carol** signs the input associated with her 3 BTC.
- This is where the beauty of Bitcoin’s cryptography comes in:
- The signatures are cryptographically tied to the specific inputs each participant controls.
- **No one can modify the transaction** after it's signed without invalidating the signatures. This ensures that no one can steal or alter the transaction.
### Step 6: **Combining the signatures**
- The coordinator collects all the signatures from the participants and assembles them into the final, fully signed transaction.
- **Key point**: The signatures are independent. Each participant only signs their part, and once all signatures are gathered, they complete the transaction together.
### Step 7: **Broadcasting the transaction**
- Once the transaction has all the required signatures, it’s ready to be broadcast to the Bitcoin network.
- The transaction looks like any other transaction on the blockchain, except it has multiple inputs and outputs from different people.
- No one from the outside can tell which input belongs to whom, or which output goes to whom, making it look like “one guy with many wallets,” as you put it.
### Summary of the "Single Transaction" aspect:
- **One big transaction** is created that has all the inputs and outputs combined.
- Each participant signs only their own inputs, and these signatures are combined to authorize the transaction.
- The result is a single transaction broadcast to the Bitcoin network, which moves all the funds at once while preserving privacy.
So, from the outside, it looks like a single person is moving money from many different wallets to many different addresses, but in reality, it’s a coordinated effort between multiple participants, each controlling only their own coins.
- Imagine we have Alice, Bob, and Carol. They each want to send some Bitcoin, but instead of making separate transactions, they agree to create a **single CoinJoin transaction**.
- They don’t trust each other completely, so this has to be done in a way where no one can cheat or steal anyone’s funds.
### Step 2: **Transaction construction (inputs and outputs)**
- Each participant starts by preparing the **inputs** (the Bitcoin they own) and the **outputs** (the addresses they want to send their Bitcoin to).
- For example:
- **Alice** has an input of 1 BTC and wants to send 0.5 BTC to an address.
- **Bob** has an input of 2 BTC and wants to send 1 BTC to an address.
- **Carol** has an input of 3 BTC and wants to send 1.5 BTC to an address.
- **Inputs** are essentially references to the Bitcoin each person owns, which they’ll be spending. These inputs are Unspent Transaction Outputs (UTXOs) from earlier transactions.
### Step 3: **Coordinator role**
- To organize the CoinJoin, there’s usually a **coordinator** (could be software or a server). The coordinator does *not* handle the coins, just helps collect the necessary information from each participant to build the transaction.
- Each person privately sends their input (UTXOs) and output (the address they want to send Bitcoin to) to the coordinator.
- **Crucial detail**: The coordinator sees which inputs belong to which participant, but it doesn’t need to know who’s sending the Bitcoin in real life.
### Step 4: **Building the transaction**
- The coordinator gathers all the inputs and outputs from Alice, Bob, and Carol and combines them into a single transaction.
- The transaction looks like one big pool of inputs and outputs:
- Inputs:
- Alice’s 1 BTC
- Bob’s 2 BTC
- Carol’s 3 BTC
- Outputs:
- Alice’s destination address for 0.5 BTC
- Bob’s destination address for 1 BTC
- Carol’s destination address for 1.5 BTC
- Since inputs are larger than outputs (because no one sends all their funds), the rest is returned as **change** to new addresses controlled by each participant.
### Step 5: **Signing the transaction**
- Now, each participant must **sign** the transaction. Here’s how:
- Each person only needs to sign the part of the transaction that involves **their own inputs** (the coins they control).
- **Alice** signs the input associated with her 1 BTC.
- **Bob** signs the input associated with his 2 BTC.
- **Carol** signs the input associated with her 3 BTC.
- This is where the beauty of Bitcoin’s cryptography comes in:
- The signatures are cryptographically tied to the specific inputs each participant controls.
- **No one can modify the transaction** after it's signed without invalidating the signatures. This ensures that no one can steal or alter the transaction.
### Step 6: **Combining the signatures**
- The coordinator collects all the signatures from the participants and assembles them into the final, fully signed transaction.
- **Key point**: The signatures are independent. Each participant only signs their part, and once all signatures are gathered, they complete the transaction together.
### Step 7: **Broadcasting the transaction**
- Once the transaction has all the required signatures, it’s ready to be broadcast to the Bitcoin network.
- The transaction looks like any other transaction on the blockchain, except it has multiple inputs and outputs from different people.
- No one from the outside can tell which input belongs to whom, or which output goes to whom, making it look like “one guy with many wallets,” as you put it.
### Summary of the "Single Transaction" aspect:
- **One big transaction** is created that has all the inputs and outputs combined.
- Each participant signs only their own inputs, and these signatures are combined to authorize the transaction.
- The result is a single transaction broadcast to the Bitcoin network, which moves all the funds at once while preserving privacy.
So, from the outside, it looks like a single person is moving money from many different wallets to many different addresses, but in reality, it’s a coordinated effort between multiple participants, each controlling only their own coins.