Researchers propose Zcash-style private Bitcoin transfers without a soft fork

Researchers astatine the cryptography probe steadfast Alloc Init person projected a strategy for bringing Zcash-style backstage transfers to Bitcoin without requiring a brushed fork. 

The proposal, called Shielded Bitcoin, would conceal transaction amounts, senders, receivers and links to antecedently spent funds utilizing encrypted notes and zero-knowledge proofs. The insubstantial was published connected Thursday by Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin.

The connection offers a imaginable way to stronger privateness for Bitcoin users without requiring statement changes to the basal protocol.

Instead of having miners enforce the privateness protocol, Shielded Bitcoin would usage Bitcoin arsenic “a neutral work and ordering layer,” the researchers wrote. Separate bundle called indexers would past verify zero-knowledge proofs, cheque that funds haven’t been double-spent, and reconstruct the authorities of the shielded system.

Shielded Bitcoin’s plan explicitly draws from Zcash’s architecture. The researchers said it likewise uses encrypted notes, nationalist nullifiers that people notes arsenic spent, and zero-knowledge proofs that amusement transactions are valid. Unlike Zcash, Shielded Bitcoin would not run its ain blockchain oregon statement mechanism.

How a shielded transportation works. Source: Alloc Init

Shielded Bitcoin draws mixed reactions 

Developer Vadim Zavodil criticized the connection connected X, arguing that overmuch of its privateness stack had already been implemented by Zcash. He questioned however overmuch privateness a recently launched strategy could initially provide, arguing that a caller shielded excavation would commencement without the anonymity acceptable Zcash has accumulated implicit years of use. 

“Privacy is simply a relation of the crowd. Zcash has a existent shielded excavation built implicit years,” helium wrote. “A marque caller metaprotocol starts astatine zero, truthful your archetypal backstage transportation hides successful a assemblage of one.”

In a companion station explaining the proposal, the Shielded Bitcoin researchers acknowledged a akin limitation, saying that ample deposits bash not automatically make a ample anonymity set. They said observers whitethorn inactive beryllium capable to constrictive down relationships betwixt transfers if a tiny fig of actors make astir notes oregon wallets grounds distinctive behavior.

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Pierre-Luc Dallaire-Demers, laminitis of post-quantum cryptography steadfast Pauli Group, raised a abstracted issue, describing the operation arsenic absorbing but “not quantum resistant astatine all.” Dallaire-Demers aboriginal said helium was exploring what a afloat post-quantum mentation could look like, assuming Bitcoin yet adopts a post-quantum signature scheme.

Zerocash co-author and StarkWare CEO Eli Ben-Sasson was much supportive of the proposal’s direction. In effect to Alloc Init’s announcement, Ben-Sasson said the archetypal intent down the Zerocash paper, which preceded Zcash, was to bring privateness to Bitcoin.

Ben-Sasson said helium had not yet work the Shielded Bitcoin insubstantial but would similar to spot the imaginativeness of privateness and scalability done zero-knowledge proofs materialize connected Bitcoin’s basal layer.

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