Shielded Bitcoin privacy proposal
Researchers propose Zcash-style private transfers on Bitcoin L1 using encrypted notes and ZK proofs without consensus changes. Shielded Bitcoin would hide sender, receiver, and amounts.
Privacy allows the individual to chose what, when, where, and who something is revealed to. Strong series potential here for both the @zksnarks_ and @zcash brands to normalize privacy and expand our reach. zkSNARKs is going way beyond a PFP project with this. Love it
great post here by @zacodil on the differences between Zcash and NEAR privacy i'd also add that NEAR privacy is non-adversarial it's less about escaping warfare, state sanctions, political persecution, tyrannies or protecting whistleblowers (all that ZEC does very well) and more about basic privacy for day-to-day activities for a larger user base, well-connected among (and connecting) many ecosystems Zcash is privacy for everyone, yes, but it thrives more in adversarial environments, don't scale as much, still relies on NEAR for broader connectivity, and requires a bit more waiting time for settlement/confirmation NEAR confidential layer on the other hand has some permission and compliance elements (non-adversarial) users need to be aware of i believe they complement each other very well you just need to be aware of the trade-offs easily my favorite projects on crypto right now ZEC for a full private, permissionless, and decentralized experience (including in adversarial situations); but with lower scalability, slower transactions, and more expensive fees NEAR for day-to-day activities you want to keep confidential, high scalability, fast transactions, lower fees, chain-abstracted experience; but with permission/centralization elements (in the private layer only) that do not work so well in adversarial environments (NEAR L1 is fully decentralized and permissionless, but transparent) we can use, support and contribute to both :)
Got comments that Zcash and NEAR have different types of privacy. Of course they do. The problems they solve are different too: > Zcash brought privacy to money that sits still. > NEAR brings it to money in motion. Swaps, perps, prediction markets, payments. ZK is very good at hiding data that one person already knows. Your balance, your note, your transfer. Shared state is harder. To prove something you have to know it, and in an order book nobody is supposed to know the whole book. Hand the book to one operator who does know everything and you are back where you started. That is what the confidential shard is for. An order book nobody can read. A perp market where your liquidation price is invisible to the people who would hunt it. A prediction market where your position does not tell everyone what you know. Zcash proves privacy with math, NEAR with attested hardware. Math is stronger. Hardware is what can run a market today. Encrypted Bitcoin, meet confidential smart contract platform.
What should be done with bitcoins whose owner does not migrate to post-quantum signatures? BIP 361 proposes a gradual deprecation of ECDSA and Schnorr vulnerable paths. However, this is merely a proposal, not an adopted Bitcoin standard. Herein lies the more difficult part. Is it better to permanently disable the ability to spend such coins, or to leave it open and risk them being seized by someone with a sufficiently powerful quantum computer? Which approach better protects ownership?
Proposal for a Zcash-style privacy feature on Bitcoin without a soft fork Researchers at [[alloc] init] have proposed “Shielded Bitcoin”—a protocol enabling private BTC transfers using Zcash’s model, directly on Bitcoin, without requiring a soft fork or hard fork. The design employs “encrypted notes,” public nullifiers, and zero-knowledge proofs to conceal transaction amounts, senders, recipients, and links between transactions. Bitcoin primarily serves as a data storage and ordering layer, while a dedicated indexer tracks and verifies the system’s state. The solution leverages Bitcoin PIPEs and witness encryption, enabling zero-knowledge proof verification to interoperate with existing Bitcoin signatures. However, the technology remains in the research phase, and a complete mechanism for depositing and withdrawing $BTC into/from the private pool is still under development. A shielded transaction is expected to be approximately 700 vbytes in size—significantly larger than standard Bitcoin transactions, which range from 100–200 vbytes—implying fees could be roughly four times higher.
Privacy has always been part on Bitcoin. Each and every mainchain transaction is pseudonymous. The only trouble is a lot of transactions to, from and on kyc exchanges. Bitcoin as intended in peer to peer setting is fully private already.
𝐩𝐫𝐨𝐩𝐨𝐬𝐚𝐥 𝐜𝐨𝐮𝐥𝐝 𝐚𝐝𝐝 𝐳𝐜𝐚𝐬𝐡-𝐬𝐭𝐲𝐥𝐞 𝐩𝐫𝐢𝐯𝐚𝐜𝐲 𝐭𝐨 𝐛𝐢𝐭𝐜𝐨𝐢𝐧 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐜𝐡𝐚𝐧𝐠𝐢𝐧𝐠 𝐢𝐭𝐬 𝐜𝐨𝐫𝐞 𝐩𝐫𝐨𝐭𝐨𝐜𝐨𝐥. researchers have proposed “shielded bitcoin,” a system that could bring zcash-style privacy to #bitcoin without changing its core rules. it uses encrypted notes and zero-knowledge proofs to hide transaction amounts, senders and receivers. however, questions remain around anonymity, storage requirements, quantum resistance and moving bitcoin:native in and out. my opinion: for me, this is one of the most interesting bitcoin privacy ideas i’ve seen recently. bitcoin’s transparency is useful, but complete visibility can also expose people and businesses. if shielded bitcoin can deliver real privacy without changing bitcoin’s core protocol, thats huge. but i’m not rushing to celebrate yet. the peg-in and peg-out system, privacy strength, storage demands and quantum resistance still need serious testing. #VrReports