# What Are Confidential Tokens?

Blockchain technology revolutionised transparency and auditability, but this same transparency creates challenges for financial privacy.

Every transaction, balance, and interaction is visible to anyone with a block explorer.

* For enterprises, this means competitors can track treasury movements and business relationships.
* For investment funds, it exposes trading strategies.
* For individuals, it reveals personal wealth and spending patterns to friends, family, and the public.

**Confidential tokens (cToken)** solve this by introducing encrypted balances while maintaining ERC-20-like functionality.

A confidential token is an encrypted version of a base token (e.g., USDC → cUSDC, ETH → cETH). Balances and amounts are stored using **FHE-based encrypted integers**, enabling operations to occur without revealing underlying values.

Confidential tokens enable users to leverage the transparency of DeFi while maintaining the financial confidentiality typically found in traditional systems.

<div data-with-frame="true"><figure><img src="/files/YDpj7O1lnbJRVWG8t4X7" alt=""><figcaption></figcaption></figure></div>

On the left, a regular token balance is transparent, so anyone can see you have 1000 USDC. On the right, a confidential token balance is encrypted, so observers see only that you have cUSDC, not the **actual amount.**


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://zaiffer.gitbook.io/wiki/zaiffer/what-are-confidential-tokens.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.