Alloc Init Proposes Zcash-Style Privacy for Bitcoin Without Soft Fork
A new proposal for shielded Bitcoin transactions has been put forth by cryptography firm Alloc Init. The system, dubbed Shielded Bitcoin, would allow users to send private transactions without requiring a soft fork. This is made possible through the use of witness encryption and zero-knowledge proofs.
According to Alloc Init's founders, Mikhail Komarov and Aleksei Moskvin, users who want to send private transactions would deposit their Bitcoins into a shared shielded pool, receive an encrypted note in return, and pass that note around like a private IOU. To spend later, the user would present the note and prove the math is valid, and the system would release the Bitcoin.
The encrypted note, not the Bitcoin itself, would be what moves on-chain. Indexers would verify the zero-knowledge proofs, check for double-spending, and reconstruct the state of the shielded system.
Komarov emphasized that this design 'turns zero-knowledge proof verification into ordinary Bitcoin signature verification,' which removes the need for a soft or hard fork.