Shielded Bitcoin: Researchers Unveil Private Transfer Protocol

Researchers at cryptography firm [[alloc] init]] have published a design for implementing private Bitcoin transfers without modifying the network's consensus rules. The protocol, called Shielded Bitcoin, hides the sender, receiver, and amount of each transaction.

The design borrows core elements from Zcash: encrypted notes and zero-knowledge proofs. Each transfer includes a proof attesting that the sender controls the notes being spent and that the input and output amounts are balanced.

A public marker called a nullifier allows the software to reject double spends without revealing which note was used. The authors acknowledge that some information remains public: timestamps, fees, and the number of inputs and outputs.