Shielded Bitcoin proposal targets privacy coin features

CryptoSlate reports that researchers Clara Shikhelman, Mikhail Komarov, and Aleksei Moskvin introduced Shielded Bitcoin in a Sept. 24 paper. The metaprotocol aims to conceal transaction amounts, senders, and recipients on Bitcoin without changing consensus rules.

The design adapts Zcash techniques, including encrypted notes and zero-knowledge proofs, while using Bitcoin for ordering and publication. Current implementation relies on OP_RETURN for data transfer. The specification lacks peg-in and peg-out mechanisms, leaving entry and exit flows unresolved.

André Dragosch, Bitwise Europe Head of Research, described Shielded Bitcoin as a potential drag on privacy coins. He observed that Bitcoin could replicate capabilities previously unique to distinct blockchains.

Zcash metrics have surged alongside the proposal. Weekly shielded transactions reached 62,379, the highest since 2022. Nearly 5 million ZEC now sit in encrypted repositories. The network settled over $23 billion in transfer volume last week, a peak not seen since 2021. ZEC traded above $1,600 this week, coinciding with the rise in hidden activity.

Sam Callahan, director of strategy and research at OranjeBTC, said, “People still misunderstand Bitcoin’s moat. Bitcoin doesn’t need to win every feature race. Privacy, speed, and functionality can be built over time.”