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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

How would you feel if all your bank transactions were made public? everyone in the world can now see how much you spent 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, the account is identified by a 42 letter hexadecimal instead of your name or account number, you can off course spread your money in as many accounts as you would like but remember that they are all linked and everyone in the world can say with good probability that its owned by you and there isnt really much privacy to begin with.

There are multiple ways you can hide your privacy within open networks like Bitcoin or Ethereum and there are many privacy focussed cryptocurrencies that we will dive into within the advanced course, for example, lets take a look at ZCash, it allows the users to stay completely open just like bitcoin or users can hide their transactions by entering the shielded pool, the shielded pool uses ZK-SNARK (Zero Knowledge Succinct Non-Interactive Arguments Knowledge ) - fancy cryptography to hide the amount, the sender and the receiver and any observer of the network does not find anything, only the receiver knows that he received the money, the miner can validate a Zero knowledge proof which proves that the sender has the money they are spending (prevention for double spending) but finds absolutely no information about the sender or the receiver.

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