The 56-page paper , dated September 24, 2026, is written by Clara Shikhelman, Mikhail Komarov and Aleksei Moskvin.
The team has "put a lot of work into thinking carefully about the security of Shielded Bitcoin and about what information the protocol reveals," Shikhelman tweeted . Komarov called it "ZCash-style privacy on the Bitcoin L1 via PIPEs v2."
ZCash-style privacy on the Bitcoin L1 via PIPEs v2. https://t.co/fhjCBWBhH2
Scott Odell, chief operating officer of [[alloc] init], tweeted that the firm had been "cooking on this for quite a while," and described it as a contribution to making Bitcoin "private, without changing Bitcoin."
Value in Shielded Bitcoin is held as encrypted "notes," and each transfer carries a zero-knowledge proof that the sender controls the notes being spent and that inputs and outputs balance. A public marker called a nullifier lets software reject double spends without revealing which note was used.
Zcash enforces those rules through its own blockchain. Shielded Bitcoin publishes transfers as data on Bitcoin, which records them without checking them, while separate software called indexers verifies the proofs and rebuilds the shielded state.
The paper contrasts this with Shielded CSV, a 2025 Bitcoin proposal in which coin owners must keep their own transaction data, which generally cannot be recovered from the chain.
Timing, fees and the number of inputs and outputs remain public, the authors write. "Like Zcash and Monero, Shielded Bitcoin preserves the privacy of who paid whom and how much, not that a shielded transfer happened," the paper states.
The paper covers only transfers inside the system. How BTC enters and leaves is left to a separate paper built on Bitcoin PIPEs v2 , earlier [[alloc] init] research that encrypts a Bitcoin signing key so it can be recovered only with a valid proof, according to the firm's website.
The current version uses the Groth16 proof system, whose security depends on an honestly run trusted setup ceremony. It publishes each transfer in an OP_RETURN output, which comes to 625 vbytes for a transfer with two inputs and two outputs, according to the paper.
That relies on the larger OP_RETURN default in Bitcoin Core v30, a c ontested change that node operators can reverse, so relay depends on enough nodes and miners keeping it, the paper notes.
An appendix sketches an optional compliance layer in which a "Trust Authority" certifies approved deposits, letting institutions verify a note's origins without exposing the transfer graph. Notes without that evidence would remain valid.
Zcash , whose design Shielded Bitcoin borrows, now trades through regulated funds in the U.S. and Europe. Grayscale's Zcash ETF began trading on NYSE Arca on August 25, and 21Shares listed Europe's first Zcash exchange-traded product on Euronext Paris and Amsterdam on September 22.
ZEC was trading at $1,592 on September 25, up 4% over the past 24 hours, with a seven-day high of $1,658.86, per CoinGecko data .