Shielded Transaction Definition
A shielded transaction is a type of transaction featured in privacy-centric cryptocurrency protocols like Zcash, which takes advantage of zero-knowledge proof technology to keep the details of a transaction hidden from public view. When a shielded transaction is used, the identity of the sender, receiver, and the value transferred are all obscured on the blockchain, offering an enhanced level of privacy compared to most other blockchain networks.
Shielded Transaction Key Points
- Shielded transactions are featured in privacy-focused cryptocurrencies like Zcash.
- The technology utilizes zero-knowledge proofs to keep transaction details hidden.
- The identity of the sender, receiver, and the amount transferred remain private in a shielded transaction.
- Through this, shielded transactions provide an additional layer of privacy over most blockchain networks.
What is a Shielded Transaction?
Shielded transactions are a specific type of transaction in the world of cryptocurrency. They are an innovative step forward in the evolution of blockchain technology, focusing on the privacy aspect which is vital for many users. Rather than having the details of every transaction available to be inspected by anyone, as is the case on a public ledger like Bitcoin’s blockchain, shielded transactions conceal this information.
Who uses Shielded Transactions?
The primary users of shielded transactions are those who prioritize privacy in their cryptocurrency dealings. This may include individuals who value their privacy highly, businesses wanting to keep their transaction detail confidential, and sometimes, unfortunately, those engaging in illegal activities due to the anonymity it provides.
Where are Shielded Transactions used?
Shielded transactions are primarily used within privacy-centric digital currencies. Notably, this includes Zcash, which was the first cryptocurrency to develop and implement the concept.
When are Shielded Transactions used?
Shielded transactions are used whenever a participant in the blockchain wants to keep their transaction details private. They can be used for any transaction, at any time, as long as both the sender and receiver are willing to use the technology to keep the transaction details hidden.
Why are Shielded Transactions important?
Shielded transactions are important in maintaining the privacy of individuals, businesses and organizations in an increasingly interconnected world. The level of anonymity that shielded transactions provide ensure confidentiality, privacy, and helps to prevent tracking or tracing of transactions.
How do Shielded Transactions work?
Shielded transactions use a cryptographic principle known as zero-knowledge proofs, which allows a person to prove they know a value x, without conveying any information apart from the fact they know the value x. In practical terms, when a shielded transaction takes place, the details of the transaction are validated and added to the blockchain, but those details (sender, receiver, value) remain encrypted and obscure to external viewers.
