Researchers publish Shielded Bitcoin design specification enabling private transfers by hiding senders, receivers, and amounts.
Tech & Launches ·
Researchers at a Bitcoin cryptography firm have released a 56-page specification for Shielded Bitcoin, a protocol enabling private transfers on the Bitcoin base layer authored by Clara Shikhelman, Mikhail Komarov, and Aleksei Moskvin. The design obscures transaction participants and amounts while requiring no modifications to Bitcoin's consensus rules, adapting cryptographic techniques from Zcash including encrypted notes and zero-knowledge proofs.
The system stores value as encrypted notes, with each transfer accompanied by a zero-knowledge proof confirming the sender controls the notes being spent and that transaction inputs balance outputs. A mechanism called a nullifier prevents double spending without revealing which specific note was used. Unlike Zcash's self-contained blockchain, Shielded Bitcoin publishes transfer data directly onto Bitcoin's chain as OP_RETURN outputs—approximately 625 vbytes per transaction with two inputs and outputs—while separate indexer software verifies proofs and maintains the shielded state. The design preserves privacy around payment participants and amounts but leaves timing, fees, and input/output counts visible, similar to Zcash and Monero.
The specification addresses only transfers within the shielded system; mechanisms for moving Bitcoin into and out of the protocol remain unspecified and will be covered in a forthcoming paper built on earlier Bitcoin PIPEs v2 research. The current version depends on the Groth16 proof system, whose security relies on a trusted setup ceremony, and its relay on Bitcoin's network hinges on nodes and miners maintaining support for larger OP_RETURN outputs.