Shielded Bitcoin: Alloc Init's Witness Encryption Technique

Misha Komarov, founder of alloc init, is working on 'shielded Bitcoin,' a private pool for Bitcoin that would cost about four times a normal transaction in fees. This technique, called witness encryption, locks a Bitcoin key that can only be unlocked by someone who proves they followed the rules.

The shielded pool is modeled after Zcash and does not require any soft forks or company operation. Users would deposit Bitcoin into the pool, receive an encrypted note, and later present it to withdraw. Komarov said the technique behind this scheme is still experimental and that his team has cut down the size of the encrypted files from 300 terabytes to about 8 terabytes in the past year.

Komarov mentioned that proposals to add new functions to Bitcoin's code for features like privacy have not been adopted. His firm's approach, called Bitcoin PIPEs, is a way to add privacy and other features to Bitcoin's base layer without changing its code.