Researchers Propose Shielded Bitcoin Using Zcash's Zero-Knowledge Proof Cryptography

A team of researchers from [alloc] init, a cryptography lab in New York, has proposed Shielded Bitcoin, a system that would enable private transactions on the Bitcoin network using Zcash's zero-knowledge proof cryptography.

The proposal, dubbed Shielded Bitcoin, would allow users to make transactions without revealing their sender, receiver, or transaction amount. This would be achieved through encrypted notes that document transaction amounts and recipients, along with a proof that verifies ownership and balance without exposing sensitive information.

However, the design lacks any mechanism for moving standard BTC into the shielded system and back, keeping it theoretical for now. The researchers plan to address this issue with Bitcoin PIPEs, an experimental method based on witness encryption.