Anonymity Set
The group of plausible alternatives a specific private transaction could be hidden among — the larger the set, the stronger the privacy.
An anonymity set is the group of plausible alternative transactions a specific private transaction could be hidden among — for example, the group of decoy outputs mixed with a real one in a ring signature. The larger and more realistic this set is, the harder it is for an observer to isolate the genuine transaction.
This is the basis for a well-documented argument that mandatory-by-default privacy is structurally stronger than optional privacy: if only a minority of transactions on a network actually use an available privacy option, those transactions can stand out specifically because they're unusual, shrinking their effective anonymity set. See Kaavon's "Privacy Coins Explained" guide.
Examples
- A larger anonymity set makes it harder for an observer to determine which specific transaction within it was the real one.
- A network where privacy is optional, and only rarely used, gives its privacy-seeking users a smaller, more conspicuous anonymity set than one where privacy is mandatory for everyone.