Shielded Bitcoin Brings Private Transfers Without Soft Fork
A new proposal for Shielded Bitcoin could bring private transfers to the network without requiring a soft fork or separate blockchain. The researchers behind the project, Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin of [[alloc] init], describe a metaprotocol where amounts, senders, recipients and links to previously spent notes remain hidden while transaction validity can still be independently verified.
The proposal, published on September 24, uses encrypted notes containing a satoshi amount and recipient information. A sender spending those notes publishes encrypted outputs, public nullifiers and a zero-knowledge proof inside a Bitcoin transaction.
Bitcoin itself would publish and order the protocol data, while its consensus rules would not interpret the private transfers. Separate software reconstructs the shielded state by replaying accepted transactions in Bitcoin block order.