Bitcoin under the hood — part 2 (Article 3)
Keys, signatures, transactions and decentralization
In the visual introduction from the previous article, it was easy to see that transactions are public, which means that everyone can see who is sending money to whom. This visibility, which is set in place to render transactions tamper-proof, actually compromises the privacy of the people involved.
When using fiat and digital currencies through third parties, they keep your data and transactions private. Only those trusted third parties know who is sending money and who receives it, and this information is kept a secret for reasons of privacy and security. However, Cryptocurrencies operate differently: while they make the transactions public, the actual identities of the parties involved remain a secret and thus privacy is assured.
To understand how this works in detail, I highly recommend watching the second video by Anders Brownworth in the video below, as it gives a very nice introduction to private and public keys, along with signing transactions. As with last time, you can follow his video along on his website.
As it is explained in the video, the transaction is public to everyone to see and even keep a copy of, but no one knows who owns the public keys involved in the transaction. And as will be shown in later articles, one private key can produce many public keys, so people are not able to tie different transactions to any single account.
