Confidential Transactions is a feature in cryptocurrency that provides privacy by hiding the transaction amount while still allowing for verification of transactions. This is achieved through the use of cryptographic techniques that encrypt the transaction amount using a special type of zero-knowledge proof called a range proof.
In a typical cryptocurrency transaction, the sender, recipient, and transaction amount are visible on the blockchain. With Confidential Transactions, only the sender and recipient are visible while the amount remains hidden. This helps protect the financial privacy of users by concealing the specific amounts involved in transactions.
Confidential Transactions add an extra layer of security and privacy to cryptocurrency transactions, making it harder for outside parties to monitor or track the flow of funds. This feature is particularly important for users who value privacy and want to keep their financial transactions confidential.
