I also have not read the specification, but it is apparent that they have created a distributed blind mix, probably based on similar principles to Bitcoin itself. The technical details of how they managed to securely distribute the blind mixing will be very interesting as I do not believe anyone has ever made a distributed blind mix before. However it is certainly not that far fetched sounding. There are already algorithms for centralized semi-trusted blind mixes. The current systems allow for perfect unlinkability of coins (or any other currency token of any sort) passing through the blind mix, even the operator of the blind mix can not link people depositing coins into the mix to people withdrawing coins from it. Essentially Alice sends bitcoins to the blind mix and gets blinded cryptographic tokens, she can then send those blinded cryptographic tokens to Bob, who can send them to the blind mix and withdraw the coins Alice has deposited. There are at least a dozen cryptographically sound systems for doing this, and they have existed (mostly as mathematical formulas in theoretic whitepapers) for decades. A traditional non-blind mix needs to be fully trusted because the coin value going into and out of the mix can be linked by the operator of the mix, but not by a passive observer (in this case someone looking at the block chain). Blind mixing only requires a semi-trusted mix operator because even the mix operator cannot link the coin value going into and out of a blind mix, nor can a passive adversary. However, traditionally the operator of the blind mix can still steal all of the coins they hold. I have not read the technical specification for Zerocoin yet, but they claim to have taken the concept of blind mixing a step further, creating a fully untrusted blind mixing *network*, that has the same unlinkability properties as a traditional centralized blind mix, in addition to protecting from the mix operator(s) stealing the coins they hold. It is a giant step forward for anonymous cryptocurrency if they have really managed to do it, on the same level of a technological achievement as Bitcoin itself imo. It will be interesting to see how they did it.