Shielded Transactions: Enhancing Privacy in Blockchain

Shielded Transaction is a transaction between two Shielded addresses.

What is Shielded Transaction?

Shielded addresses use zero-knowledge proof to ensure that transaction data is encrypted and remains verifiable by network nodes.

Shielded Transaction is a transaction between two secure addresses. The addresses, transaction amount and memo field remain confidential except for the transfer of funds between the secure Sprout and Sapling addresses.

During the sending of a transaction, recipients will not be informed about an address that is protected by an unencrypted memo, and receivers of a transaction will not know the name or address from the receipt in your bank account. Recipients will not know the value sent to their address, but only the value that was sent to them and any encrypted memo included by the participant.

The best implementation of Shielded Transactions is implemented in Zcash – there are two types of addresses: transparent and shielded. In the Zcash protocol, transparent addresses are equivalent to public addresses in the Bitcoin protocol and function similarly. All transparent addresses communicate with a pool of transparent values, allowing transaction data to be publicly disclosed and viewed in the Zcash blockchain at any time by all users.

Secure addresses encrypt transaction data and require zkSNARK generation to validate the transaction. Secure addresses provide the highest level of privacy and security compared to transparent addresses. Thus, a transparent address to a transparent address results in an unыhielded Transaction, and a transparent address to a Shielded address results in a Shielded Transaction.

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