Bitcoin Privacy Guides
Practical techniques for enhancing your Bitcoin privacy.
Bitcoin transactions are permanently recorded on a public blockchain. Without privacy practices, your entire financial history can be traced. Privacy isn't about hiding wrongdoing—it's about maintaining basic financial dignity.
New to Bitcoin privacy? Start with Why Privacy Matters for foundational concepts.
The Privacy Challenge
Every Bitcoin transaction reveals information:
WHAT THE BLOCKCHAIN SHOWS
═══════════════════════════════════════════════════════════════
Transaction: abc123...
├── Inputs (where funds came from)
│ └── Address: 1ABC... (0.5 BTC)
├── Outputs (where funds went)
│ ├── Address: 1XYZ... (0.3 BTC) ← Recipient
│ └── Address: 1DEF... (0.2 BTC) ← Change back to sender
└── Fee: 0.0001 BTC
Chain analysis firms use this to:
• Link addresses to identities
• Track spending patterns
• Map your entire transaction history
• Share data with governments and corporations
The goal: Break these links so your transactions can't be traced.
Privacy Techniques Overview
| Technique | What It Does | Difficulty | Cost |
|---|---|---|---|
| UTXO Management | Prevents linking your transactions | Beginner | Free |
| CoinJoin | Mixes your coins with others | Intermediate | Coordinator fees |
| PayJoin | Hides payments in normal-looking transactions | Intermediate | Free |
| Running a Node | Hides your addresses from third parties | Beginner | Hardware cost |
🎯 UTXO Management
UTXO Management Guide
Difficulty: Beginner | Cost: Free
The foundation of Bitcoin privacy. Learn to manage your unspent transaction outputs (UTXOs) to prevent address linking.
Key concepts:
- Understanding UTXOs and why they matter
- Coin control: choosing which coins to spend
- Avoiding address reuse
- Consolidation strategies and timing
- Labeling for privacy awareness
Why start here: Every other privacy technique builds on good UTXO management. Master this first.
🔀 CoinJoin
CoinJoin Guide
Difficulty: Intermediate | Cost: ~0.3-1% coordinator fees
Mix your Bitcoin with other users to break transaction history links. Multiple participants combine inputs and receive equal-sized outputs, making it impossible to trace which input maps to which output.
What you'll learn:
- How CoinJoin works technically
- Available CoinJoin implementations
- Best practices for maximum privacy
- Common mistakes to avoid
- Post-mix spending strategies
Prerequisites: Understanding of UTXOs and basic wallet operation.
🤝 PayJoin
PayJoin Guide
Difficulty: Intermediate | Cost: Free
A privacy technique where the payment recipient also contributes inputs to the transaction. This breaks the common heuristic that all inputs belong to the sender.
Benefits:
- Looks like a normal transaction (steganographic)
- No coordinator fees
- Improves privacy for both sender and receiver
- Can be done peer-to-peer
Prerequisites: Wallet that supports PayJoin (BIP78).
Privacy Progression
Build privacy skills in this order:
Level 1: Foundation
- Run your own node — Stop leaking addresses to third parties
- Understand chain analysis — Know what you're protecting against
- Basic UTXO management — Label coins, avoid address reuse
Level 2: Active Privacy
- Coin control mastery — Choose which UTXOs to spend
- CoinJoin basics — Break transaction links
- Post-mix best practices — Don't undo your privacy
Level 3: Advanced
- PayJoin — Steganographic payments
- Consolidation timing — Manage fees without sacrificing privacy
- Multiple wallet strategy — Separate identities for different purposes
Common Privacy Mistakes
1. Address Reuse
Using the same address twice links all transactions together. Always generate new addresses.
2. Consolidating After CoinJoin
Combining mixed outputs defeats the purpose. Each mixed UTXO should be spent separately.
3. Revealing Holdings
Posting screenshots, discussing amounts online, or using KYC exchanges for everything.
4. Ignoring Change Outputs
Change goes back to you and can link transactions. Be aware of change management.
5. Trusting Block Explorers
Looking up your addresses on third-party block explorers reveals your interest in those addresses. Use your own node.
Privacy vs. Anonymity
Important distinction:
Privacy: Others can't see your financial activity Anonymity: Others can't link your activity to your identity
Bitcoin with good practices can achieve reasonable privacy. True anonymity is much harder and may require:
- Non-KYC acquisition
- Tor/VPN usage
- Careful operational security
- Multiple identity separation
Most people need privacy, not perfect anonymity.
Tools and Software
Wallets with Privacy Features
- Sparrow Wallet — Excellent coin control, CoinJoin support
- Wasabi Wallet — Built-in CoinJoin coordinator
- BTCPay Server — PayJoin support for merchants
Supporting Infrastructure
- Bitcoin Node — Set up your own
- Tor — Network-level privacy
- Whirlpool — CoinJoin implementation
Related Resources
Foundational Knowledge
Security Integration
- Operational Security — Privacy is part of security
- Threat Model Assessment — What level do you need?