Welcome to the lecture Privacy Preserving Cryptocurrencies.

This is lecture number nine.

So as always, I will briefly review what we did in the previous lecture.

Then I will talk about the content that is covered in this lecture.

And finally, we will discuss how this lecture fits into the overall picture.

So in the last lecture, we started with the main or one of the three main blocks.

And in particular, we started with an introduction to Bitcoin.

So this is the general picture, the general setting we are in.

So we didn't look at Bitcoin yet.

It was more a general introduction into cryptocurrencies.

So in particular, we start with a general motivation where we discuss the difference

between decentralized and centralized systems.

We discuss the advantages and disadvantages.

We then discussed also the difference between fiat currencies and cryptocurrencies.

We discussed the underlying data structure that is used in the setting of cryptocurrencies.

It's essentially a linked list where the basic idea is that each entry, each field contains

the link to the previous block.

And this is then essentially the call to nowadays the blockchain.

We then discussed mercantries for two reasons.

First of all, in some sense, the mercantries are generalization of the blockchain.

And second, the mercantries part of Bitcoin as well.

We discussed how identities are in general formed, and in particular in the setting of

Bitcoin.

And we have seen that this is essentially just the hash of the public key.

And then we also discussed the challenges to construct the cryptocurrency.

So here we started with a toy currency that we called goofy coin.

And we essentially figured out that this coin is not, it's not unfortunable.

So essentially there was no way that we kept track of the individual transactions and therefore

double spending was possible.

We then discussed the second cryptocurrency that was called Scroogecoin.

And the idea of Scroogecoin was that we now maintained an append-only ledger of transactions.

While this solves the problem of double spending, it introduces another problem.

And that was the problem of the central authority, because Scrooge essentially was taking care

of which block goes into the blockchain and which doesn't.

And we essentially noticed that the challenge of constructing a cryptocurrency is the decentralization

of Scroogecoin.

So in this lecture, we will essentially give an introduction to Bitcoin.

So the introduction to Bitcoin will now cover the main parts that you will see.

In particular, it will cover transactions.

So you will learn how transactions actually look like in Bitcoin.

You will understand how these transactions are organized in blocks.

These are the individual component that store the transactions.

You will then learn how these blocks are mingled together in the blockchain.

And we will also discuss the peer-to-peer network that is used in Bitcoin.

And this peer-to-peer network, in fact, includes several things.

It contains the process of mining.

It's the process of creating new blocks.

And we will also discuss the consensus mechanism.

And consensus mechanism is, in fact, the procedure where the participants in the network work

together in order to agree which one is the next block that will appear in the blockchain.