Bitcoin privacy proposal avoids a soft fork

• Shielded Bitcoin proposes private transfers on Bitcoin without changing consensus rules.
• The design hides amounts and counterparties using encrypted notes and zero-knowledge proofs.
• The system remains experimental, with Bitcoin entry and exit mechanisms still under development.

Shielded Bitcoin has proposed Zcash-style private transfers without changing Bitcoin (BTC)’s consensus rules.

The metaprotocol would hide transfer amounts, senders and recipients while using Bitcoin for data publication.

“It’s basically Zcash,” Misha Komarov, founder of [alloc] init, said in an interview recorded Sept. 10 for Unchained Premium.

Shielded Bitcoin uses encrypted notes, nullifiers and zero-knowledge proofs to validate transfers without exposing their contents.

Each shielded transfer could use about 700 vbytes, versus roughly 100 to 200 vbytes for typical Bitcoin payments.

Bitcoin would publish and order encrypted transfer data, while separate indexers verify proofs and reconstruct the shielded state.

The proposed system still faces technical hurdles, including Bitcoin entry and exit mechanisms, witness encryption and proof-system choices.

Following the update, BTC was trading up 0.1% at approximately $84,261.75.