Starknet to launch privacy-enhanced Bitcoin asset 'StarkBTC'

Starknet, an Ethereum Layer 2 network, said it will launch a Bitcoin-based asset, 'StarkBTC (strkBTC),' with enhanced privacy features.

According to Decrypt on the 26th (local time), the Starknet Foundation and StarkWare said in a press release that StarkBTC will enable private transfers without disclosing account balances. The token is similar in structure to the privacy coin Zcash in that it uses zero-knowledge proof technology to conceal transaction details.

StarkBTC supports both public and private addresses, providing flexibility from a regulatory-compliance perspective. In particular, it is designed to allow certain institutions or third parties to audit transaction histories via a 'viewing key,' and it said compatibility with risk management frameworks was also taken into account.

Eli Ben-Sasson, a StarkWare co-founder and board member of the Starknet Foundation, said, "Privacy is a basic requirement for market participation," adding, "Zero-knowledge cryptography makes open markets possible while preserving participants' confidentiality." He also emphasized that "StarkBTC is the first real-world implementation of this approach."

Users will be able to convert Bitcoin into StarkBTC via a bridge provided by Atomiq Labs. Atomiq Labs said it uses an atomic-swap method based on mathematical structures without centralized intermediaries, designed so that assets are automatically returned if a transaction fails.

Catherine Kirkpatrick Bos, StarkWare's general counsel, said, "Our goal is to minimize reliance on third parties," adding, "The viewing key will be held by a separate third party, establishing a structure that can respond to requests from regulators."

Meanwhile, Starknet has recently focused on expanding Bitcoin use. In September last year, it introduced staking for Bitcoin-based assets, with rewards paid in its native token, STRK. However, it has also faced operational stability issues, including a network outage of more than 4 hours last month due to block production problems.