What is privacy within blockchains

A look into what privacy means on blockchains and trying to make sense of the data from the block explorers

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Lesson Transcript

[00:00 - 00:16] what is privacy within blockchain. Now that we know what is a blockchain and how blocks are created, we can now deep dive into the privacy that's within blockchains. So how would you feel if only your bank transactions were made public?
[00:17 - 00:28] Everyone in the world can now see how much you spend on coffee and how much your rent is, and basically all your financial data is now public. This is more or less what Bitcoin does with one key difference.
[00:29 - 00:39] The account is identified by a 42 letter hexadecimal instead of your name or account number. And we'll take a look at this in a second.
[00:40 - 01:01] You can of course spread the money in as many accounts as you would like, but remember that they are linked and everywhere in the world can say with good probability that it's owned by you and there isn't really much privacy to begin with. There are multiple ways you can hide your privacy with open networks like Bitcoin and Ethereum.
[01:02 - 01:10] And there are many privacy-focused cryptocurrencies that we will dive into within the advanced course. For example, let's take a look at Zcash.
[01:11 - 01:30] It allows the users to stay completely open just like Bitcoin or users can hide their transaction by entering the shielded pool. The shielded pool uses ZK Snox, zero-knowledge interactive arguments of knowledge, or in other words, fancy cryptography to hide the amount, the sender and the receiver.
[01:31 - 01:54] And any observer of the network does not find out anything. Only the receiver knows that he received the money and the miner can validate a zero-knowledge proof which proof that the sender has the money that they are spending, so that prevents double spending, but finds absolutely no information about the sender or the receiver.
[01:55 - 02:07] Similarly, Monero uses green signatures and confidential transactions to achieve privacy. We will talk about all these techniques later in the course and how you can use them to your advantage.
[02:08 - 02:28] [ Silence ]

[00:00 - 00:16] what is privacy within blockchain. Now that we know what is a blockchain and how blocks are created, we can now deep dive into the privacy that's within blockchains. So how would you feel if only your bank transactions were made public?

[00:17 - 00:28] Everyone in the world can now see how much you spend on coffee and how much your rent is, and basically all your financial data is now public. This is more or less what Bitcoin does with one key difference.

[00:29 - 00:39] The account is identified by a 42 letter hexadecimal instead of your name or account number. And we'll take a look at this in a second.

[00:40 - 01:01] You can of course spread the money in as many accounts as you would like, but remember that they are linked and everywhere in the world can say with good probability that it's owned by you and there isn't really much privacy to begin with. There are multiple ways you can hide your privacy with open networks like Bitcoin and Ethereum.

[01:02 - 01:10] And there are many privacy-focused cryptocurrencies that we will dive into within the advanced course. For example, let's take a look at Zcash.

[01:11 - 01:30] It allows the users to stay completely open just like Bitcoin or users can hide their transaction by entering the shielded pool. The shielded pool uses ZK Snox, zero-knowledge interactive arguments of knowledge, or in other words, fancy cryptography to hide the amount, the sender and the receiver.

[01:31 - 01:54] And any observer of the network does not find out anything. Only the receiver knows that he received the money and the miner can validate a zero-knowledge proof which proof that the sender has the money that they are spending, so that prevents double spending, but finds absolutely no information about the sender or the receiver.

[01:55 - 02:07] Similarly, Monero uses green signatures and confidential transactions to achieve privacy. We will talk about all these techniques later in the course and how you can use them to your advantage.

[02:08 - 02:28] [ Silence ]

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