Zcash is a privacy- protecting cryptocurrency It has two types of addresses

Shielded addresses, which fully protect your financial privacy And transparent addresses, which have balances and transaction histories that are viewable by everyone Transparent addresses work just like Bitcoin They're public Shielded addresses, however, are private

They don't reveal balances or transaction histories Zcash lets you decide what type of address you want to use For example, if you're running a charity that values transparency, you might use a transparent address so other people can verify each transaction On the other hand, if you're just doing some personal shopping, you might use a shielded address so your balance info and past purchases are kept private So how does Zcash's shielded transactions actually work? Zcash's shielded transactions are enabled by a cryptographic breakthrough known as the Zero-Knowledge Proof

The Zero-Knowledge Proof allows anyone to prove they know something without sharing what they know For example, let's take two people, Peggy and Victor

Peggy sends Victor some Zcash And both of them use a shielded address Thanks to Zcash's implementation of Zero-Knowledge Proofs, Peggy can pay Victor

Without either of them revealing their balances or prior payments So Victor is happy because his info stays private and he knows for sure that he got paid And Peggy is happy because her financial info remains private too

Zero-Knowledge Proofs make Zcash's privacy possible They allow Zcash payments to be private without a bank or credit card company in the middle, verifying every transaction And ultimately, they make Zcash's vision of a decentralized, private, global currency a reality for everybody