Shielded Transaction: A Complete Guide On Its Benefit

Shielded transaction work by assigning private and public keys to the Sender & receiver. The Private key works as a signature; meanwhile, the Public key verifies the signature. This functioning makes transactions secure and authenticated, where access only works between the people involved.

When it comes to CryptoCurrency transactions, the two commonly known types are:

• Shielded transaction: It provides more privacy & security. zCash is a commonly used cryptocurrency in its transactions. These are more complicated than unshielded ones because of their complexities.

•  Unshielded transactions: Unshielded transactions are the more common of the two, and they work just like regular fiat currency transactions. So, a transparent address to a fine address would result in an unshielded transaction.

How Does Shielded Transaction Work?

Shielded transactions work by assigning public and private keys to the sender and receiver. Shielded addresses can or cannot include encrypted memos, and wallet transaction receipts do not reveal the sender’s address.

This means that only the people involved in the transaction can see it and no one else. 

Shielded addresses use zero-knowledge proofs to allow transaction data to be encrypted by remaining verifiable by network nodes.

Till now, the best implementation of Shielded transactions seen so far is zCash. In Zcash, there are two types of addresses, Transparent and Shielded. The transparent address on the Zcash protocol equals the public discourse on the Bitcoin protocol. All transparent addresses refer to the fine value pool, which reveals transaction data and allows it to be viewed on the Zcash blockchain anytime.

Shielded addresses encrypt the transaction data and require the generation of zkSNARKs to verify the transaction’s validity. These shielded addresses bring a new, higher level of privacy and security when we compare them to transparent addresses. So, a fine address to a fine address would result in an unshielded transaction, a fine address to a shielded address would result in a shielded transaction, a shielded address to a shielded address would result in it, and a shielded address to a transparent address would result in an unshielded transaction.

Benefits Of Shielded Transaction

Shielded transactions offer several benefits like lower fees and, on top of that, increased Privacy and security. When a user shields a transaction, the data is encrypted and stored in Zcash blockchain making it more complex and challenging to access by other parties to interact or interfere with your financial activities. The plus point is that these are smaller in size than their unshielded counterparts, resulting in lower transaction fees.

Drawbacks

Everything has its Pros and Cons, and so do Shielded transactions also have. The part which makes it secure and privacy supportive also makes it more complex for a typical user. These are more expensive due to that than unshielded ones. It takes longer to process and is not available at all exchanges.

Conclusion

In conclusion, a shielded transaction is a type of cryptocurrency transaction that offers increased security features. These are made possible by the use of zk−SNARKs, which is a form of zero-knowledge proof. This keeps the address, amount, transactions, and memo field secure from the Public, with a separation in sharing funds between Sprout and Sapling shielded addresses.