Definition
The transaction graph is the network of connections that Bitcoin transactions create between addresses over time. Because every output spent becomes an input elsewhere, the entire ledger forms one enormous directed graph in which coins flow from address to address. Chain-analysis firms study this graph to cluster addresses into wallets and to follow funds from source to destination. Understanding the transaction graph is the first step to understanding both surveillance and the privacy tools built to resist it.
Why the graph leaks privacy
Individual addresses are pseudonymous, just numbers, but the linkages between them are not random. By following edges in the graph and applying heuristics, an analyst who identifies a single endpoint (say, a regulated exchange deposit) can often reconstruct a user's broader activity. The graph never forgets: every link recorded in a block is permanent and globally visible, which is why a single privacy mistake can retroactively expose past behavior.
Reshaping the graph
Privacy techniques work by altering what the graph appears to show. CoinJoin and CoinSwap inject ambiguity or remove direct edges; PayJoin makes ownership of inputs uncertain; using fresh addresses for every receipt avoids collapsing many payments into one obvious cluster. None of these erase the graph, they make the conclusions an analyst draws from it less trustworthy, restoring a measure of fungibility.
The act of tracing edges through this graph is detailed in our Output Linking entry, and the clustering it enables is covered under Wallet Clustering.
In Simple Terms
The transaction graph is the network of connections that Bitcoin transactions create between addresses over time. Because every output spent becomes an input elsewhere, the…