Researchers Propose Zcash-Style Privacy Protocol for Bitcoin

Researchers from Alloc Init have introduced "Shielded Bitcoin," a metaprotocol designed to enable private BTC transactions without requiring a soft fork or trusted bridge operators. The system utilizes Zcash-inspired encrypted notes and zero-knowledge proofs to hide transaction amounts and counterparty details directly on the Bitcoin base layer. The design employs indexers to verify proofs and track nullifiers, ensuring decentralization, while implementing a multi-key system to separate spending, viewing, and recovery functions.