Confidential Transactions and Validation | Blockchain and Cryptocurrency Courses | 2019 | Summary and Q&A

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July 11, 2022
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Stanford Online
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Confidential Transactions and Validation | Blockchain and Cryptocurrency Courses | 2019

TL;DR

Confidential transactions and zero-knowledge proofs allow for the protection of data on the blockchain while maintaining public verifiability.

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Questions & Answers

Q: Why is the public visibility of transactions on the blockchain problematic for businesses?

Public visibility of transactions on the blockchain allows anyone to see who paid whom and the amounts involved, which can be a privacy concern for businesses.

Q: How do confidential transactions protect the privacy of data on the blockchain?

Confidential transactions replace the actual amounts with commitments, making them hidden and unchangeable, ensuring privacy while preserving public verifiability.

Q: How can the validity of transactions be verified if the amounts are hidden?

Zero-knowledge proofs enable the verification of transaction validity without revealing any information about the hidden values.

Q: What are some examples of blockchains that offer complete data privacy?

Blockchains like Zcash and Monero hide not only the amounts but also the identities of the payers and payees, providing complete data privacy.

Summary & Key Takeaways

  • Blockchain transactions publicly reveal the source addresses, amounts, and recipients, posing a privacy issue for businesses.

  • Confidential transactions replace amounts with commitments, hiding the values while ensuring they cannot be changed.

  • Zero-knowledge proofs validate transactions without revealing any information about the values involved.

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