Alloc Init Proposes Shielded Bitcoin for Private Transfers
A team of researchers at Alloc Init has proposed a system to bring Zcash-style private transfers to Bitcoin without requiring a soft fork. The proposal, called Shielded Bitcoin, would conceal transaction amounts, senders, receivers, and links to previously spent funds using encrypted notes and zero-knowledge proofs.
The paper, published by Clara Shikhelman, Mikhail Komarov, and Aleksei Moskvin, suggests that instead of miners enforcing the privacy protocol, Shielded Bitcoin would use Bitcoin as a 'neutral publication and ordering layer.' Separate software called indexers would then verify zero-knowledge proofs, check that funds haven't been double-spent, and reconstruct the state of the shielded system.
The researchers claim that Shielded Bitcoin's design draws from Zcash's architecture, using encrypted notes, public nullifiers that mark notes as spent, and zero-knowledge proofs to show transactions are valid. However, unlike Zcash, Shielded Bitcoin would not operate its own blockchain or consensus mechanism.
The proposal has received mixed reactions from the community. Developer Vadim Zavodil criticized the idea on X, arguing that much of the privacy stack had already been implemented by Zcash and questioning how much privacy a newly launched system could initially provide.