Welcome to the lecture Privacy Preserving Cryptocurrencies.

We are now in lecture number 10 and my name is Dominik Schröder.

As always, we will start this lecture with a brief review of what you learned in the

previous lecture.

I'll give an outline of what we're going to do in this lecture and then we see where

we are on our overall path towards understanding the privacy in cryptocurrencies, respectively

what can we do in the setting.

So in the last lecture, we essentially started by giving an introduction into Bitcoin.

And this is interesting for several reasons.

First of all, Bitcoin is the largest cryptocurrency that is out there and also was the very first

one.

And people at the very beginning believed that there is a certain anonymity given in

Bitcoin.

And to understand what kind of anonymity is given, respectively how additional techniques

can be used on top of Bitcoin to achieve a stronger notion, of course, we first have

to understand what are the main components of Bitcoin.

So in particular here, we discussed the transactions in Bitcoin.

And this is essentially the underlying messages, if you want so, that are transferred within

Bitcoin.

We also discussed how these transactions are organized into blocks.

And the blocks are essentially a collection of several transactions that are then added

to an append-only ledger.

And this append-only ledger is called the blockchain.

Finally, you learn something about the P2P network in Bitcoin.

So the P2P network is actually also quite interesting because it gives a very low entry

barrier.

In fact, anybody can participate if you want so.

There's no significant hardware needed.

You can just join the network and follow the protocol.

And in this respect, we also needed to understand how does the mining process work.

And the mining essentially describes the process of creating a new block and adding this block

to the blockchain.

And to be very honest, the real magic of Bitcoin comes essentially from the consensus.

And the consensus is the mechanism that is executed within the protocol in which the

participants agree on what is the next block.

And this is quite interesting because at the very beginning or years ago, for quite some

time people believed that achieving consensus in such a network is something that is not

possible.

And this is also known as the Byzantine agreements problem.

So Bitcoin does many things slightly different.

In particular, there is no need that there is actually an honest party proposing the

next block and the protocol doesn't terminate.

So there are many, many reasons why Bitcoin is no contradiction to these impossibility

results that we know for Byzantine agreements.

So the goal of the previous lecture was to build the understanding how Bitcoin works

and how the anonymizing techniques then can work in this area.

So now that you're essentially familiar with the underlying basics of Bitcoin, we're now

going to take a look into anonymization techniques for Bitcoin.

And in particular, we will take a look at two protocols and this, the first one is called

CoinJoin and the second one, CoinShuffle.