zkPoH: Zero-Knowledge Proof-of-Hodl

The recent development in cryptographic privacy for Bitcoin transactions introduces a new system called zkPoH, or Zero-Knowledge Proof of Hodl. This innovative approach allows Bitcoin holders to demonstrate control over a minimum balance of 1 BTC without disclosing specific details such as the UTXOs (Unspent Transaction Outputs), wallet addresses, exact balances, transaction history, or private keys. The method operates by generating an off-chain snapshot of Bitcoin UTXOs, which is then encoded into a Merkle tree, establishing a Merkle root that serves as a public commitment.

In the zkPoH system, the prover selects up to four UTXOs from the snapshot privately. The verification process is facilitated using Rust to generate witness inputs for a Noir circuit, which ensures that each selected UTXO is part of the committed snapshot and verifies the validity of the Merkle paths. Additionally, the circuit confirms whether the cumulative value of the chosen UTXOs meets or exceeds 100 million satoshis (equivalent to 1 BTC). If these conditions are met, the only information the verifier receives is confirmation that the prover holds at least 1 BTC against the snapshot used, maintaining the prover's privacy regarding specific transaction details.

The prototype utilizes Blake2s hashing for the Merkle trees and employs signed WIF ownership proofs to verify Bitcoin ownership outside of the circuit. Looking ahead, potential enhancements include integrating ownership verification directly within the circuit, supporting advanced Bitcoin protocols like Schnorr signatures and Taproot, and implementing additional features such as snapshot epochs, nullifiers, Utreexo commitments, and customizable threshold values. While currently experimental and intended primarily for educational purposes, this project lays the groundwork for more private proof-of-hold mechanisms in Bitcoin transactions. The ongoing development can be followed through its repository available on GitHub at github.com/fabohax/zkPoH.