Bitcoin could soon get Zcash-style 'shielded' privacy without changing its rules
Researchers have proposed a new system called 'Shielded Bitcoin' that allows for encrypted, private transactions without requiring changes to the Bitcoin protocol. The system uses mathematical proofs to verify transactions while keeping sender, recipient, and amount details hidden from the public blockchain.
Why it matters
This development addresses growing privacy concerns in cryptocurrency, potentially enabling more secure business and payroll transactions on the Bitcoin network.
The Shielded Bitcoin paper , published on Thursday by Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin of cryptography firm [alloc] init, borrows the encrypted payment design used by Zcash.
Inside the proposed system, bitcoin-denominated value would be held in encrypted records called notes. Spending one would publish a marker showing it had been used, along with a mathematical proof that the sender owned the funds and had not created new ones. The amount, sender and recipient would remain hidden.
Zcash’s blockchain checks those proofs itself. Shielded Bitcoin would publish the transfer data on Bitcoin and leave the checks to separate software that anyone could run. A Bitcoin transaction could therefore be confirmed while the private payment recorded inside it failed Shielded Bitcoin’s checks.
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