Cryptographers have proposed creating a "private Bitcoin."

Cryptographers from the organization Alloc Init have proposed a metaprotocol concept called "Shielded Bitcoin," designed to allow the concealment of transfers, transaction participants, and other parameters within the network of the leading cryptocurrency—details that are currently traceable on the blockchain.

The study’s authors—Mikhail Komarov, Alexey Moskvin, and Clara Shikhelman—assert that neither modifying the Bitcoin protocol itself nor launching a separate blockchain is required. The core idea is for Bitcoin to remain a sort of public bulletin board—continuing to record and order data—while operations within Shielded Bitcoin function via encrypted records known as "notes." Each note can conceal the transaction amount and the data required for the owner to access the funds, keeping the contents invisible to outsiders.

According to the cryptographers' concept, when a user wishes to transfer funds, they create a transaction that publishes three elements to the Bitcoin network: encrypted notes, unique serial numbers (nullifiers), and special zero-knowledge proofs. The researchers explain that nullifiers are necessary to prevent the same note from being spent twice: once a note is spent, a unique number is generated, and any attempt to use it again will be rejected. Zero-knowledge proofs make it possible to verify that the transfer complies with the rules without revealing the amount involved or exactly which notes were spent.

The authors note that specialized programs known as "indexers" can monitor activity within Shielded Bitcoin. These programs scan blockchain data, validate proofs, and maintain the system's current state. Since all rules and data are transparent, anyone can independently reconstruct the sequence of events without having to rely on a single operator. To offer users flexibility regarding privacy, the system distinguishes between two types of keys: those used to execute transactions and those used to view them without the authority to spend the cryptocurrency.

Shielded Bitcoin is not intended to make transactions completely invisible on the Bitcoin network: users will still see the fact that a transfer occurred, the time of publication, the number of notes involved, the fee amount, and the transaction itself carrying this data. Cryptographers promise that only the amounts, the identities of the sender and recipient within the shielded section, and the specific notes spent will remain private. The concept's authors have not yet disclosed how bitcoins will be transferred from the main network to the shielded protocol and back, but they have promised to address this in future publications.

Excitement surrounding the leading cryptocurrency has reached its highest level since 2024, driven by the price surge toward $87,000, according to experts from the on-chain platform Santiment. Analysts specified that this phenomenon is driven by the "Fear of Missing Out" (FOMO).