What is Shielded Transaction?[With Example]

If we send a coin or token from one address to another, all the transaction details such as; All types of information are collected in the blockchain, including the addresses, the amount, and the memo. Anyone can view or collect this information. While transparency and decentralized rhetoric are more prevalent in the crypto industry but many of us take this transparency seriously and don't want to share their transaction details publicly. With this in mind, many blockchains have developed the Shielded Transaction feature on their platforms. A shielded Transaction is a type of Transaction between two secure addresses or Shielded Addresses.

A Shielded Address sender can attach an encrypted memo, and recipients of descending transactions can find the sender's address via a transaction receipt in their wallet.

The receiver will only know the amount sent to their address. Seems complicated? Let's not look at some examples.

We have seen the best implementation so far in Zcash in terms of Shielded Transaction. Zcash has two types of addresses, transparent address, and shielded address. The transparent addresses of the Zcash protocol are equivalent to the Bitcoin protocol and consequently work similarly. Transparent addresses publicly disclose transaction data and have the opportunity to view the Zcash blockchain at any time.

In contrast, saved or shielded addresses encrypt the transaction data, and zkSNARKs are created to verify the Transaction's validity. When we compare secure addresses or Shielded addresses with transparent addresses, these Shielded addresses bring a new, higher level of privacy and security. There are three types of transactions based on this type of interpretation.

Shielded address transactions from public addresses: Public address information is public, and shielded address information is hidden. E.g. https://blockchair.com/zcash/transaction/de1d78ee310ba2c9fbeb13881f431fdc8b55aa5f79e61dd3c294177401878f11

Shielded Address to Shielded Address Transaction: The address of the sender and the recipient and the amount of the Transaction are hidden. E.g. https://blockchair.com/zcash/transaction/35f6674a1691f21aff6a3819467dbba82aaebf061d50c6ac55f39fbeae73b9a6

Shielded Address to Public Address Transaction: Shielded Address Information is Hidden, Public Address Information is Public. E.g. https://blockchair.com/zcash/transaction/218f5cee4aa8d3469ea0e4cd49fc0b5b60e3d53fcff9392384a2c137fc48ea45

Shielded addresses have the following features:

1. The private key structure is different, in which a root key (SK) and other functions derived from other keys work.

2. The specific information of the Transaction is hidden in the chain, and this information can be seen only through private keys.

3. There is no resource model, meaning there is no bandwidth and power in the address, and the Transaction does not use bandwidth and power.

The article translated from: https://bitcointalk.org/index.php?topic=631891.msg59465650#msg59465650

And also published: https://bitcointalk.org/index.php?topic=5388896.msg59465802#msg59465802