Guide on How to Use PayJoin (BIP78)

PayJoin (P2EP) is a privacy-enhancing Bitcoin transaction protocol. It helps obscure the transaction trail by having both the sender and receiver contribute inputs to the transaction. Here’s a step-by-step guide:

Step 1: Understand the Basics

• What is PayJoin?

A protocol allowing sender and receiver to combine inputs, improving privacy by making the transaction indistinguishable from regular ones.

• Why Use It?

• Enhances privacy for both sender and receiver.

• Breaks common transaction tracking heuristics.

Step 2: Check Prerequisites

• Wallet Support

Ensure both sender and receiver use wallets that support PayJoin (e.g., Wasabi, Samourai, BTCPay Server, BlueWallet).

• Merchant Support

If sending to a merchant, confirm they accept PayJoin.

Step 3: Sender’s Setup

1. Choose a Wallet

Use a PayJoin-compatible wallet.

2. Prepare Inputs

Ensure sufficient Bitcoin balance in your wallet.

3. Initiate Payment

When scanning or entering the merchant’s invoice, ensure the wallet recognizes it as PayJoin-enabled.

Step 4: Receiver’s Setup (Merchant/Individual)

1. Install PayJoin-Compatible Server

• Use tools like BTCPay Server or a compatible wallet with PayJoin integration.

• Configure your payment system to enable PayJoin.

2. Generate Invoice

Create a standard invoice as usual. PayJoin functionality is embedded seamlessly.

Step 5: Execute the PayJoin Transaction

1. Sender Sends Transaction Proposal

The sender’s wallet proposes a transaction and sends it to the receiver’s PayJoin endpoint.

2. Receiver Adds Inputs

The receiver’s wallet or server adds its inputs to the transaction, creating a PayJoin transaction.

3. Transaction Broadcast

The updated transaction is signed and broadcast to the Bitcoin network.

Step 6: Verify Transaction

• Confirm the transaction is successful on the Bitcoin blockchain.

• Both sender and receiver should verify the amount and confirm privacy enhancements.

Step 7: Best Practices for Enhanced Privacy

• Avoid reusing Bitcoin addresses.

• Use CoinJoin or other mixing services for additional privacy if needed.

• Regularly update wallet software for the latest PayJoin support.

By following these steps, you can seamlessly use PayJoin for more private Bitcoin transactions.

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