Coinjoin Transaction (4 inputs, 4 outputs) - Legacy P2PKH

To follow along this tutorial

Clone the Github repository
cd code
npm install or yarn install
Execute the transaction code by typing node tx_filename.js
Alternatively you can enter the commands step-by-step by cd into ./code then type node in a terminal to open the Node.js REPL
Open the Bitcoin Core GUI console or use bitcoin-cli for the Bitcoin Core commands
Use bx aka Libbitcoin-explorer as a handy complement

What is a Coinjoin

The signatures, one per input, inside a transaction are completely independent of each other. This means that it’s possible for Bitcoin users to agree on a set of inputs to spend, and a set of outputs to pay to, and then to individually and separately sign a transaction and later merge their signatures. The transaction is not valid and won’t be accepted by the network until all signatures are provided, and no one will sign a transaction which is not to their liking.

To use this to increase privacy, the N users would agree on a uniform output size and provide inputs amounting to at least that size. The transaction would have N outputs of that size and potentially N more change outputs if some of the users provided input in excess of the target. All would sign the transaction, and then the transaction could be transmitted. No risk of theft at any point.

Consider the following transactions made at the same time: A purchases an item from B, C purchases an item from D, and E purchases an item from F. Without Coinjoin, the public blockchain ledger would record three separate transactions for each input-output match. With Coinjoin, only one single transaction is recorded. The ledger would show that bitcoins were paid from A, C, and E addresses to B, D, and F. By masking the deals made by all parties, an observer can’t, with full certainty, determine who sent bitcoins to whom.

To read more about Coinjoin:

Bitcoin Developer Guide - Coinjoin
Top-notch fungibility framework ZeroLink
The current most advanced Coinjoin wallet Wasabi Wallet

What we will do

Let’s create a Coinjoin transaction mixing four different transactions.

We will do the following:

Inputs	->	Outputs
Alice_1	->	Bob_1
Carol_1	->	Dave_1
Eve_1	->	Mallory_2
Mallory_1	->	Alice_2

Inputs

Outputs

Alice_1

Bob_1

Carol_1

Dave_1

Eve_1

Mallory_2

Mallory_1

Alice_2

The four signers agree on a uniform output amount of 0.2 BTC.

We will create four UTXOs to spend from, with different amounts but with at least 0.2 BTC. If someone spend a UTXO that is more than 0.2 BTC, we will create a additional output for his change.

Create UTXOs to spend from

Import libraries, test wallets and set the network.

const bitcoin = require('bitcoinjs-lib')
const { alice, bob, carol, dave, eve, mallory } = require('./wallets.json')
const network = bitcoin.networks.regtest

First let’s create four UTXOs with a single transaction.

sendmany "" '{"n4SvybJicv79X1Uc4o3fYXWGwXadA53FSq":0.2, "mh1HAVWhKkzcvF41MNRKfakVvPV2sfaf3R":0.2, "mqbYBESF4bib4VTmsqe6twxMDKtVpeeJpt":0.25, "mwkyEhauZdkziHJijx9rwZgShr9gYi9Hkh": 0.3}'

Here we send:

0.2 BTC to alice_1 P2PKH address
0.2 BTC to carol_1 P2PKH address
Send 0.25 BTC to eve_1 P2PKH address
Send 0.3 BTC to mallory_1 P2PKH address

Generate a block to dave_1 P2WPKH address.

generatetoaddress 1 bcrt1qnqud2pjfpkqrnfzxy4kp5g98r8v886wgvs9e7r

Then we need to know which UTXO corresponds to which address.

Get the output indexes (vout) of the transaction, so that we have the four outpoints (txid / vout).

gettransaction TX_ID

Find the output index (or vout) under vout

We can also check UTXOs of specific addresses.

scantxoutset start '["addr(n4SvybJicv79X1Uc4o3fYXWGwXadA53FSq)", "addr(mh1HAVWhKkzcvF41MNRKfakVvPV2sfaf3R)", "addr(mqbYBESF4bib4VTmsqe6twxMDKtVpeeJpt)", "addr(mwkyEhauZdkziHJijx9rwZgShr9gYi9Hkh)"]'

Creating the Coinjoin transaction

Now let’s spend the UTXOs and create four new ones. A facilitator, let’s say alice_1, will create the transaction, sign his input, then pass the partially-signed transaction to the next participant and so on until everybody has signed and someone broadcast it.

Create a keypair for each spender (alice_1, carol_1, eve_1, mallory_1), so that they can sign.

const keyPairAlice1 = bitcoin.ECPair.fromWIF(alice[1].wif, network)
const keyPairCarol1 = bitcoin.ECPair.fromWIF(carol[1].wif, network)
const keyPairEve1 = bitcoin.ECPair.fromWIF(eve[1].wif, network)
const keyPairMallory1 = bitcoin.ECPair.fromWIF(mallory[1].wif, network)

Create an address for each recipient (bob_1, dave_1, mallory_2, alice_2), so that they can receive.

const keyPairBob1 = bitcoin.ECPair.fromWIF(bob[1].wif, network)
const p2pkhBob1 = bitcoin.payments.p2pkh({pubkey: keyPairBob1.publicKey, network})

const keyPairDave1 = bitcoin.ECPair.fromWIF(dave[1].wif, network)
const p2pkhDave1 = bitcoin.payments.p2pkh({pubkey: keyPairDave1.publicKey, network})

const keyPairMallory2 = bitcoin.ECPair.fromWIF(mallory[2].wif, network)
const p2pkhMallory2 = bitcoin.payments.p2pkh({pubkey: keyPairMallory2.publicKey, network})

const keyPairAlice2 = bitcoin.ECPair.fromWIF(alice[2].wif, network)
const p2pkhAlice2 = bitcoin.payments.p2pkh({pubkey: keyPairAlice2.publicKey, network})

We also have two more recipients that will get back their change (eve_1 and mallory_1).

const p2pkhEve1 = bitcoin.payments.p2pkh({pubkey: keyPairEve1.publicKey, network})
const p2pkhMallory1 = bitcoin.payments.p2pkh({pubkey: keyPairMallory1.publicKey, network})

Create a BitcoinJS transaction builder object.

const txb = new bitcoin.TransactionBuilder(network)

Add each inputs by providing the outpoints.

txb.addInput('TX_ID', TX_VOUT)
txb.addInput('TX_ID', TX_VOUT)
txb.addInput('TX_ID', TX_VOUT)
txb.addInput('TX_ID', TX_VOUT)

Add each 0.2 BTC payment outputs.

txb.addOutput(p2pkhBob1.address, 2e7)
txb.addOutput(p2pkhDave1.address, 2e7)
txb.addOutput(p2pkhMallory2.address, 2e7)
txb.addOutput(p2pkhAlice2.address, 2e7)

Add the change outputs of eve_1 and mallory_1.

txb.addOutput(p2pkhEve1.address, 5e6 - 5e4)
txb.addOutput(p2pkhMallory1.address, 1e7 - 5e4)

These UTXOs will not be coinjoined. One might reasonably assume that the 4950000 satoshis UTXO belongs to eve_1 and that the 9950000 satoshis UTXO belongs to mallory_1. Let’s also subtract the mining fees (0.0005 BTC each) from them. We can have different policies regarding who has to pay for the mining fees, it is just easier that way for our example.

The miner fee is calculated by subtracting the outputs from the inputs.
(20000000 + 20000000 + 25000000 + 30000000)ins - (20000000 + 20000000 + 20000000 + 20000000 + 4950000 + 9950000)outs = 100 000 100 000 sats
It equals to 0,001 BTC, this is the mining fee.

Each participant signs their input.

txb.sign(0, keyPairAlice1)
txb.sign(1, keyPairCarol1)
txb.sign(2, keyPairEve1)
txb.sign(3, keyPairMallory1)

Participants are signing with the default SIGHASH_ALL flag, which prevents inputs or outputs from being manipulated after the fact.

Finally we can build the transaction and get the raw hex serialization.

const tx = txb.build()
console.log('Transaction hexadecimal:')
console.log(tx.toHex())

Inspect the raw transaction, check that everything is correct.

decoderawtransaction TX_HEX

Broadcasting the transaction

It’s time to broadcast the transaction via Bitcoin Core CLI.

sendrawtransaction TX_HEX

Inspect the transaction.

getrawtransaction TX_ID true

Don’t forget the second argument to returns a detailed json object.

« Batching Transaction (1 input, 5 outputs) - Legacy P2PKH Native Segwit P2WPKH »