Shielded Bitcoin Proposal Outlines Private Transfers on Bitcoin L1
The Sept. 24 design uses encrypted notes, public nullifiers and zero-knowledge proofs without changing Bitcoin’s consensus rules.
A Sept. 24 proposal outlines a Bitcoin (BTC) Layer 1 metaprotocol for private transfers without changing Bitcoin’s consensus rules.
Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin of [[alloc] init] proposed Shielded Bitcoin as a transfer system built on encrypted notes, public nullifiers and zero-knowledge proofs. Bitcoin would handle publication and transaction ordering, while the protocol’s shielded state would be rebuilt off-chain by replaying accepted transfer data in Bitcoin order.
Each note would contain a satoshi amount and recipient-addressing information, but the plaintext would not appear on-chain. Transfers would include encrypted recipient outputs, public spend markers and a proof covering note membership, spending authorization and value conservation.
The design aims to keep the amount, sender, receiver and position in the transfer graph private. Transfer timing, arity, output grouping, fees and carrier-transaction metadata would remain visible.
The transfer layer is described as noncustodial, with spending authority retained by wallet-controlled keys. Indexers and replay systems would have read-only functions.
The proposal does not define how BTC would enter or leave the system. Peg-in and peg-out mechanisms are outside its scope, so the paper does not establish a completed deployment, production implementation or operational entry and exit process. The design resembles shielded-note systems such as Zcash but would not create a separate consensus chain.
