How do Zcash Shielded Transactions Work? When you receive shielded ZEC, the network creates a "note." This is like an encrypted UTXO containing your address, the value, and some random data that makes it unique. The note itself never touches the blockchain. Instead, a cryptographic commitment to the note gets added to a global Merkle tree that holds every note commitment ever created. The commitment is just a hash of the note's fields. It's one way so you can't reverse engineer the note from it, and collision resistant so no two different notes can produce the same commitment. The chain stores the commitment but not the note. When you spend a note, you need to prove two things: that your note exists and that you haven't already spent it. To prove it exists, you prove a Merkle path from your commitment to the tree's root without revealing which commitment is yours. For double-spend prevention you reveal a nullifier, a value derived from the note that only you can compute. Every note maps to exactly one nullifier. When you spend, that nullifier gets published and added to a set the network tracks. If anyone tries to spend the same note twice, the same nullifier would show up again and the network would reject it immediately. But nobody watching can link a nullifier back to its corresponding commitment without knowing your secret key. They see a nullifier appear and they know some note was spent, but they have no idea which of the millions of commitments it came from. The zk-SNARK ties everything together. When you construct a shielded transaction, you generate a small proof that confirms you own a valid note in the tree. The nullifier matches it and the amounts balance. The network verifies the proof and processes the transaction without learning what was spent, who received it, or how much moved. That's privacy as architecture.(Delphi Digital)