Clear DefinitionsShielded Transactions
1 min read
Pronunciation
[shild-id tranz-ak-shuhns]
Analogy
Like sending a sealed envelope instead of a postcard where only the recipient can read the contents.
Definition
Privacy-enhanced blockchain transactions that encrypt transaction details—such as amounts and addresses—using zero-knowledge proofs.
Key Points Intro
Shielded transactions protect user privacy by hiding on-chain data.
Key Points
Confidentiality: masks sender, recipient, and amount
Zero-knowledge: uses zk-SNARK or zk-STARK proofs
Shielded pool: segregated UTXO or note commitments
Verification: proofs validate correctness without revealing data
Example
Zcash’s Sapling protocol enables shielded transfers where users create JoinSplit proofs to move funds into and out of shielded pools.
Technical Deep Dive
Transactions include merkle roots of commitment trees, nullifiers to prevent double-spends, and zk-proofs generated by proving keys. Verifier contracts on-chain check proof validity. Sapling’s batched proving and reduced proof sizes optimize performance.
Security Warning
Privacy cracks (e.g., chain analysis) can still correlate shielded transactions if not used properly.
Caveat
Higher computational and gas costs limit adoption; interoperability with transparent addresses adds complexity.
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