Before we begin our journey in the vast world of privacy, we must first go through the basics, if you are already familiar with this, its still recommended that you bear with us so we are on the same page for all fundamental concepts.

What is a blockchain?

According to Wikipedia:

A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree)

Thats a lot to understand, lets try to break it down a little, a blockchain is a list of blocks, blocks contain transactions which are the state changes, currency moving from one address to another. Blockchain essentially have 3 main components:

1. Peer to peer network a peer to peer network is formed between peers who have the equal privileges and share all the data between each other using a gossip protocol. In this kind of network, every node can talk to every other node and nodes can drop out and new nodes can join in without any authorization.

2. Consensus mechanism Having the peer-to-peer (p2p) network is great but without having a centralized server, how do these nodes come to an agreement? The answer is consensus mechanism, a consensus mechanism is a way by which these nodes can reach an agreement, consensus mechanisms have existed before the era of blockchain and have been widely used in distributed systems, such as Paxos and Raft, Bitcoin used a new consensus mechanism called Proof of Work (PoW), the idea was simple, if you can prove that you have done some computation before anyone else, you will be rewarded and consensus is achieved by validating the computation. We will talk about this more in the next lesson!

3. Cryptography Blockchain relies heavily on cryptography such as Hashes, Merkle trees, digital signatures, public key cryptography and more, we will walk through each of these in the Cryptography module.