Shielded Transaction

A shielded transaction is a transaction on the blockchain where some data about it is concealed through encryption. Shielded transactions use zero-knowledge proofs to hide the sender’s and receiver’s addresses, the transaction amount, and the memo field.

 

The use of zero-knowledge proofs or its advanced version, zkSNARKS, allows blockchain nodes to validate the shielded transaction even if they do not know the exact details of it. This way, no one except the two parties involved in the transaction knows its details. Other nodes in the blockchain cannot see the details of such a shielded transaction.

Zcash is one of the most popular blockchains that support shielded transactions. Users on the blockchain can leverage this option if they wish to shield their address and transact with another address with the same setting.