Bitcoin with Zcash-grade privacy: what Shielded Bitcoin offers and when to expect it

What is Shielded Bitcoin?

On September 24, Alloc Init, a cryptography lab in New York, published a 56-page paper titled “Shielded Bitcoin.” The lead author is Clara Shikhelman, head of protocol research and formerly of Chaincode Labs. Mikhail Komarov and Aleksei Moskvin co-wrote it with her. The authors' own slogan sums up the idea: no soft forks, no bridges, no operators — just Bitcoin.

In short, transfers inside the system hide the amount, the sender and the recipient, the same way the Zcash privacy coin does. The network's rules stay as they are, and there's nothing for miners to agree on.

The paper has drawn interest. Eli Ben-Sasson, a co-author of Zerocash (the research Zcash grew out of), pointed out that Zerocash was originally meant to bring privacy to Bitcoin itself and said the new work is heading in the right direction. On September 28, Shikhelman is presenting the project at the Bitcoin Treasuries conference.

How Shielded Bitcoin works

A regular Bitcoin transfer is an open book. Anyone can see where the coins came from, where they went and how much was sent. Shielded Bitcoin changes three parts of that picture.

• Encrypted “notes” instead of public outputs. Money inside the system sits in records that tell outsiders nothing about the amount or the owner.
• Every transfer proves itself. It carries a zero-knowledge proof. The math confirms the coins weren't created out of thin air or spent twice, but doesn't reveal whose they are or how many.
• Bitcoin works as a bulletin board. The network just publishes the data and puts it in order. The authors call it “a neutral publication and ordering layer.” Miners don't have to check the private protocol, so no fork is needed.

Like Zcash and Monero, Shielded Bitcoin hides who paid whom and how much, but not the fact that a hidden transfer took place.

What stays hidden: Bitcoin vs Shielded Bitcoin vs Monero

The key difference is in the last row: Shielded Bitcoin exists only on paper so far, while Monero has been live for years, and you can get XMR today through an instant crypto exchange, straight to your own wallet.

Shielded Bitcoin fees: what privacy would cost

Privacy isn't free here. An encrypted transfer takes up about 700 virtual bytes, compared with 100–200 for a regular Bitcoin transaction. Miners charge by size, so a hidden transfer would cost roughly four times as much as a normal one. On top of that, the fees themselves are still visible to everyone.

When will Shielded Bitcoin launch?

• It's research, not a product. There's no launch date and no software for regular users.
• No way in or out yet. The paper has no mechanism for moving bitcoin into the shielded part and back out, and without one, the scheme can't be used.
• It needs a trusted setup. The cryptography has to be “switched on” in a way that leaves no one holding the secret parameters. Zcash itself has moved on. Since 2022, its newer shielded pool, Orchard, has run on Halo 2 proofs, which need no such setup.
• No protection against quantum computers. For a project meant to last for years, that's a real gap.

How to make Bitcoin more private today

Full privacy isn't on offer in Bitcoin, but a few tools already work:

• CoinJoin. Several people merge their transfers into one big transaction, which blurs the trail of who paid whom. The best-known CoinJoin wallet is Wasabi. These services have become riskier to use. In April 2024, the founders of Samourai, the wallet behind the Whirlpool mixer, were arrested at the request of US authorities, and the company that ran Wasabi's coordinator shut it down that same year.
• PayJoin. The sender and the recipient both add coins to the same transaction, so analysts have a harder time telling which part is the actual payment.
• Silent Payments. The BIP-352 standard lets you share one public address, while the money sent to it arrives at different addresses that aren't linked to each other. Some wallets already support it, including Cake Wallet.

All three hide the links between addresses, not the amounts. How much bitcoin was sent is still there on the blockchain for anyone to see.

Why it matters now: EU AMLR and privacy coin delistings

Demand for privacy is growing, while there's less and less room for it on exchanges. On July 10, 2027, the EU's anti-money laundering regulation, AMLR, kicks in. Crypto services will be barred from running anonymous accounts and from handling anonymity-enhancing coins such as Monero and Zcash. Big exchanges started dropping these coins even earlier: Binance, OKX and Kraken in Europe delisted Monero back in 2024. Our step-by-step guide on how to buy Monero in 2027 shows how to get it without them.

Meanwhile, the privacy coin market has tripled since April. We broke down what's behind that growth in our article on why privacy coins have rallied.

Need privacy right now?

You don't have to wait for Shielded Bitcoin to become a product. Private transfers have worked for years on networks that had them built in from day one.

The most direct way is to exchange Bitcoin for Monero without registration. Monero has been running since 2014, and every transfer hides the sender, the recipient and the amount by default, so there's nothing extra to set up.

If you prefer Zcash's approach, the same one Shielded Bitcoin is built on, you can buy Zcash with Bitcoin and keep it on a shielded address.

With VertEXchange, you don't need an account to swap, and the coins go straight to your wallet.