Payjoin (P2EP)

💡 The Plain-English Definition

Payjoin — also called Pay-to-EndPoint or P2EP — is a privacy technique where both the sender and receiver contribute inputs to a transaction, breaking the foundational chain analysis assumption that all inputs in a transaction belong to the same person — without requiring coordination with strangers.

🤔 But Why Though?

The common input ownership heuristic (the chain analysis assumption that all inputs in a transaction share a single owner) underlies most of Bitcoin’s surveillance infrastructure. CoinJoin (the technique that combines multiple independent users’ transactions) breaks this assumption by design but requires coordinating with strangers, special software, and often a waiting period. Payjoin achieves the same privacy improvement with only two parties: the sender and the receiver already communicating for a normal transaction.

The mechanism: rather than the sender constructing a transaction with only their own inputs, the receiver adds one of their own inputs to the transaction as well. The combined transaction now has inputs from two different people — shattering the common input ownership assumption. An analyst observing this transaction cannot determine which inputs belong to which party, what the payment amount was, or which output is the payment and which is change. The privacy gain is substantial: not only does the transaction break clustering, it also confuses the change output analysis (since both parties contributed inputs and both may receive outputs, the standard heuristics for identifying change fail entirely). Payjoin requires merchant or counterparty support — the recipient’s software must be able to participate in the transaction construction. BIP78 standardises this protocol. Wallet support includes BTCPay Server (the open-source payment processor), Wasabi Wallet, Sparrow Wallet, and a growing number of others as of 2026.

🌍 The Real-World Analogy

When paying at a till, instead of handing over exactly your banknote and receiving change, imagine you and the shopkeeper each put some notes into a shared envelope, then each take out the appropriate amount — you walk away having paid the right amount, they walk away with the right revenue, but an outside observer watching the envelope exchange can’t tell who contributed what or what the transaction was worth. Payjoin is that shared envelope transaction in Bitcoin form.