Types of SHIELD transactions in the PIVX Ecosystem:
Transparent address
Transparent address
Transparent address
SHIELD address
SHIELD address
Transparent address
SHIELD address
SHIELD address
Addresses and transaction amounts are publicly visible on the blockchain. This works just like Bitcoin where the sender, receiver, and the transaction (including the amounts) are publicly visible.
The addresses and the amounts of transactions are completely hidden. Even if a transaction between SHIELD accounts is recorded on the PIVX blockchain, it will be hard for people who don't know anything about it to link the addresses of the transaction and prove that they are related.
A Zero-Knowledge protocol thus allows you to do something REALLY impressive. To prove that you know something without revealing what that something is.
Put another way, let's say you have knowledge of something, but do not want to share it (for a plethora of reasons: security protocols, preventing hacking, etc).
But you NEED to authenticate to another party/person/entity/computer that you indeed KNOW that. Dilemma. How do you do that without giving away that secret?
That's the very definition of "zero-knowledge" - no ("zero") information about the secret is revealed, but the second party (or any other party that needs to validate) is convinced (in full) that you know the information/data/details (that secret).
When you don't trust the other person.
When you trust the other person but don’t want PERSONAL details floating around online.
When you are “neutral” about trusting the other person but need to complete some transaction.
When you need to persuade another person that you DO have/know something, and can demonstrate it in a mathematical and computational sound manner.
You want to make a purchase (online, or in a store). Obviously, the retailer needs to know you have the funds and that the funds can get sent. Otherwise, there is no transaction that can take place. So, you need to demonstrate (prove) that you have enough money to pay for that item. BUT, you probably do NOT want to disclose the exact amount of your total holdings/account balance, etc to that individual/retailer. By using a Zero-Knowledge proof, this information (PROOF of your funds) can thus be transmitted and proven to be true without disclosing anything else. Your personal information is safe. Your identity is safe. Your total balance is safe. The retailer is satisfied (yes, you have the funds, thank you!) and you are satisfied you’ve demonstrated you have sufficient funds to complete the transaction, knowing no other information was transmitted (or leaked or obtained by the retailer).
There is more though to the SHIELD Zero-Knowledge Proof story, however. An owner of a SHIELD address may choose to share their Shield address and transaction details with any trusted third parties. This is accomplished through the use and sharing of view keys.
Users and owners are free to transact, send, and receive funds between SHIELD and Transparent addresses, anytime.
With this, we highly encourage each and every user of PIVX to get familiar with how Shield and Transparent transactions work, as there are implications on one's financial data protection when de-shielding or shielding (sending to a transparent address or receiving from a transparent address).
There are two main types of addresses in the PIVX ecosystem: shielded and transparent. PIVX-Shielded addresses remain hidden, and any transaction that takes place between PIVX-Shielded addresses keep the address, the transaction amount, and any content of the Encrypted Memo field, completely hidden. PIVX-Transparent addresses are publicly viewable, and any transactions between them and other addresses are completely publicly viewable on the PIVX blockchain, meaning addresses and amounts are visible anytime.
An owner of a shielded address may choose to share their shielded-address and transaction details with any trusted third parties. This is accomplished through the use and sharing of specialized view keys.