Shielded Bitcoin Proposal Aims to Bring Private Transfers to Bitcoin

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 design explicitly draws from Zcash's architecture, which 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.

The researchers believe it could offer a potential path to stronger privacy for Bitcoin users without requiring consensus changes to the base protocol.