Shielded Bitcoin: Alloc Init's Proposal for Private Bitcoin Transfers
Researchers at Alloc Init have 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, uses Bitcoin as 'a neutral publication and ordering layer.' Separate software called indexers would verify zero-knowledge proofs, check that funds haven't been double-spent, and reconstruct the state of the shielded system.
The design explicitly draws from Zcash's architecture, which similarly uses encrypted notes, public nullifiers that mark notes as spent, and zero-knowledge proofs that show transactions are valid. Unlike Zcash, Shielded Bitcoin would not operate its own blockchain or consensus mechanism.