Blockchain & Cryptocurrency Glossary

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Payment Obfuscation Mechanisms

1 min read
Pronunciation
[pay-ment uhb-fuh-skay-shun mek-uh-niz-uhmz]
Analogy
Like mixing colored balls in a box so you can’t tell which ball came from which person originally.
Definition
Techniques—such as CoinJoin, tumblers, payment channels, and privacy-preserving cryptocurrencies—used to obscure transaction origins, amounts, and flows to enhance financial privacy.
Key Points Intro
Payment obfuscation hides on‑chain linkability and transaction patterns.
Key Points

CoinJoin: Multiple users combine inputs and outputs in one TX.

Tumblers/Mixers: Pool and shuffle coins to break trails.

Stealth addresses: Generate one‑time addresses per payment.

Payment channels: Conduct off‑chain transfers settled on‑chain.

Example
A user uses Wasabi Wallet’s CoinJoin to mix BTC before sending to an exchange, preventing address reuse tracking.
Technical Deep Dive
CoinJoin coordinator collects participant UTXOs, builds joint TX with equal-value outputs, participants sign inputs, broadcast, and split fees. Channel updates use LN onion routing.
Security Warning
Mixers may be sanctioned or banned; use with regulatory awareness.
Caveat
Obfuscation adds latency, fees, and regulatory scrutiny.
Related Terms
CoinJoin
Stealth Address
Lightning Network

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