This section gives a description of the technology used by Zcash.

It is organized in three steps:

• How do transparent transactions Zcash work;
• How do shielded transactions work if the participants are honest;
• How are participants made to be honest.

Summary

• Each block has a list of transactions
• Each transactions has 3 optional "bundles": transparent, sapling & orchard¹
• Every bundle has inputs and outputs
• Outputs are notes, i.e. coins
• A transparent Output has
  • a value in ZEC
  • a recipient address
• Inputs reference previous outputs
• A Transparent input has
  • a transaction ID
  • an output index²
• Sapling and Orchard are shielded (=encrypted)
• The note information is encrypted
  • only the receiver (and optionally the sender) can decrypt it
  • encrypted data is opaque to the rest of the network
  • it cannot be used for validation!
• Sapling & Orchard Inputs and Outputs are hashes
• Hashes hide the real data but they are not random
  • Hashes are calculated from the note information
  • A ZKP guarantees that the calculation is correct
• Outputs are commitments (=hash) of the note
• Inputs are nullifiers (another hash) of the commitment
• Each note has a unique nullifier. The same nullifier cannot be used twice: it prevents double spending
• Inputs and outputs are not linkable (the same note has different commitment & nullifier)

Footnotes