Thanks for the heads-up of this thread.

I spent a month working on a peer-to-peer Bitcoin privacy solution back in May, it's called BitPrivacy.

It's aim is a fully decentralized solution providing strong privacy, and as such it is more ambitious and complicated than genjix's CoinJoin.

A decentralized solution spreads the legal risk over everyone running nodes - I'd rather be a developer of privacy software than someone running a privacy service. I spent a couple of days reading the laws of my country (UK), and they are surprisingly broad.

Technically the plan is to have a peer-to-peer network over Tor. Privacy is achieved by everyone writing their inputs to the network; when all are supplied they make a new Tor connection & write their outputs.  

BitPrivacy version 0.2 featured:
- Bitcoinj-based
- Arbitrary N-party transaction schemes
- Blind signatures via the Bouncy Castle library
- All communication over a DHT, via the mature TomP2P library
- Aggressive trading strategy - it tries to transact with everyone simultaneously

Some things I didn't get round to:
- Peer discovery & running a well-known node - you have to enter an IP to connect to
- Adding a command-line switch for ProdNet (an easy code change)
- Tor

You can download the jar file right now, and join some testnet coins between N wallets. There is a thorough description of the protocol at DETAILS.md, and the threat model and defenses are in THREATS.md. The code quality is rough, but it does have some test cases. Forks, code-plundering, etc all welcome!

I actually put in a grant request to the Foundation for this. I don't think I'll ever get it, at least it gave me an incentive to document everything.