CoinJoin gives you consumer grade financial privacy by shuffling your Dash with other users. All the Dash in your wallet consists of different inputs, which you can think of as separate, discrete coins. It uses an innovative process to join your inputs with the inputs of at least two other people in a single transaction, so the value in Dash never leaves your wallet. You retain control of your money at all times.
CoinJoin begins by breaking your transaction inputs down into standard denominations. These denominations are 0.001, 0.01, 0.1, 1 and 10 Dash – much like the paper money you use every day.
Your wallet then sends requests to specially configured software nodes on the network called masternodes. These masternodes are informed then that you are interested in creating a certain denomination using CoinJoin. No identifiable information is sent to the masternodes, so they never know who you are.
When two other people send similar messages, indicating that they wish to join coins of the same denomination, a session begins. The masternode instructs all three users’ wallets to pay the now-transformed inputs to themselves. Your wallet pays that denomination directly to itself but in a different address (called a change address).
Your wallet can repeat this process a number of times with each denomination. Each time the process is completed it’s called a “round.” The user may choose between 2-16 rounds of CoinJoin.
Your funds will pass through at least the number of rounds you specify. Dash 0.16 includes an update known as Random Round CoinJoin which will join a given denomination by up to three extra rounds to further improve privacy.
This process happens in the background without any intervention on your part. When you wish to make a transaction using your denominated funds no additional waiting will be required.
Note that CoinJoin transactions will be rounded up so that all transaction inputs are spent. Any excess Dash will be spent on the transaction fee.