Zcash-Inspired Shielded Bitcoin Protocol Offers Private Transfers Without Network Changes

Researchers at alloc init have published a design for private Bitcoin transfers called Shielded Bitcoin. The protocol uses encrypted notes and zero-knowledge proofs to hide the sender, recipient, and amount of a payment.

The team has built on Zcash's technology, which also uses these mechanisms for private transactions. Shielded Bitcoin requires no changes to Bitcoin's consensus rules, making it compatible with the existing network.

However, the paper only covers transfers within the shielded system and does not address how BTC enters or leaves the system. This is left for a separate paper that will build on earlier alloc init research using Bitcoin PIPEs v2.