Researchers from Alloc Init have proposed “Shielded Bitcoin,” a metaprotocol that hides BTC transfer amounts and counterparties without changing Bitcoin’s consensus rules. The system relies on encrypted notes and zero-knowledge proofs built directly on Bitcoin’s existing base layer, with indexers verifying proofs and tracking nullifiers to prevent double spending. According to the researchers, anyone can run these indexers, removing any centralized point of control. Grayscale recently noted that AI makes it easier to link wallet addresses to real identities, and its head of research Zach Pandl stated that tools like Zcash’s shielded transactions could become close to a necessity for privacy-minded users.
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