Blockchain & Cryptocurrency Glossary

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Private Transactions

1 min read
Pronunciation
[pry-vit tranz-ak-shuhns]
Analogy
Like sending a sealed letter that only the recipient can open, without postal workers reading the contents.
Definition
Transactions whose details—such as sender, recipient, and amount—are encrypted or hidden from public mempool and block explorers, visible only to authorized parties or via zero‑knowledge proofs.
Key Points Intro
Private transactions enhance confidentiality in otherwise transparent blockchains.
Key Points

Encryption: Payload encrypted under recipient’s key.

zk‑proofs: Prove validity without revealing values.

Permissioned relay: Only select nodes see raw TX.

On‑chain settlement: Commitments posted, reveal proofs.

Example
Aztec Network uses zk‑SNARKs to submit private ETH transfers that only sender and recipient can decrypt.
Technical Deep Dive
User constructs zk‑SNARK proof for `balance_decrease` and `balance_increase`, sends to privacy pool contract which verifies and updates Merkle tree root.
Security Warning
Trusted setup risks in zk systems can compromise privacy guarantees.
Caveat
Privacy layers add gas and complexity; balance with performance.
Related Terms
Private Mempool

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