Welcome to Bulliscoming Media Tornado Cash Review.
Blockchain technology, which was introduced with the birth of bitcoin, has brought about a new chain of developments in the tech and financial world. Blockchain is the core of cryptocurrencies and Web3 and it is known for a few key features.
These features form the core of what blockchain technology is about and the solutions it brings. One such key feature, which is very important, is transparency.
The blockchain is an open-source, decentralized data-storage ledger that keeps records of transactions done on the blockchain. The transactions recorded on the blockchain are transparent, which means that anyone can access the blockchain ledger and see the full history of all transactions done on the blockchain, down to the very first transaction recorded on the blockchain, known as the “genesis block”.
This key feature is intended to make the blockchain unbiased and openly accessible to everyone. However, it can also be a disadvantage. User transactions on the blockchain are supposed to be decentralized and anonymous. But since the records are transparent and easily accessible by anyone, these transaction records can be traced to the original transaction wallet.
This can even go further with the use of CEXs requiring KYC features, making it possible for user identity to be revealed through the connection of transaction records and wallet address tracking techniques to link user identity to a wallet address.
This defeats the whole point of performing transactions on the blockchain since both blockchain transactions and user identities on the blockchain are supposed to be pseudonymous, which means the user’s identity is to be concealed while transaction records are transparent. In a bid to solve this problem, this is where Tornado Cash comes in.
What is Tornado Cash?
Since transactions are transparent on the blockchain, with records of deposit and withdrawal wallet addresses including the amount transacted available for public view, these can be traced back to the original wallet address. The wallet information can be tracked continuously for every transaction made or can even be linked to the user identity on CEX platforms, revealing the user identity.
Tornado Cash is a coin mixing protocol built on Ethereum-based zero-knowledge proofs. What this means is that Tornado Cash is a decentralized smart contract protocol that allows users to hide their transaction history on the Ethereum network.
Tornado Cash was launched in 2019 to improve users’ privacy by concealing and mixing transaction history on the blockchain using a smart contract protocol. Since its launch, according to the blockchain research firm, Elliptic, Tornado Cash has been used to mix over $1.5 billion in crypto transactions.
However, the U.S. Treasury Department suggests that Tornado Cash has been used to mix over $7 billion in crypto, as well as being used to conceal and mix transactions from illegal sources such as hackers. It has also been suggested that the Tornado cash protocol has been used to conceal and transfer funds stolen from some of the largest crypto attacks, such as the Ronin hack and the recent Nomad heist.
Also read; Best Crypto Wallets To Use
Who Developed Tornado Cash?
Although Tornado Cash was developed by Roman Semenov and Roman Snow in 2019, it is currently run and developed by a DAO. The original developers of the protocol handed over the rights to the protocol in May 2020 after signing the contract update referred to as the Trusted Setup Ceremony.
As a result of the contract, the developers handed over management of the protocol’s multisize wallet protocol, thereby losing control over the protocol to become community-based and fully decentralized.
How Does Tornado Cash Work?
Tornado Cash works similarly to other coin mixers, which serve as a service to ensure user privacy by concealing transaction history on the blockchain. The funds are deposited into the coin mixer protocol, which then mixes up the transactions within the network and withdraws the funds into a separate address that is different from the deposit address.
This process breaks the link between the deposit address and the withdrawal address, making it very difficult to track the original wallet address since the funds are deposited into the smart contract protocol and the withdrawal of funds is done into a different address.
However, in the case of Tornado Cash, when the cryptocurrency is deposited into the smart contract protocol, a hash is created and a private key is generated. After the completion of the mixing process, the private key is required to authenticate the original owner of the deposited funds before a withdrawal can be approved.
Once deposits are made into the protocol, they are added to the Tornado cash liquidity pool, and then withdrawals can be facilitated directly from the liquidity pool, making it difficult to determine the exact sender wallet address since withdrawals are made into multiple wallet addresses.
When using tornado cash, it is advised not to withdraw the funds immediately from the protocol. This is because newly mixed transactions are easier to track considering the short time frame between deposit and withdrawal.
One of the major reasons users prefer to use tornado cash to conceal transaction history is simply to ensure anonymity when interacting with the blockchain. To further ensure transactions are not monitored, it is advisable to also use a VPN service while using Tornado cash because the transaction times can be traced using the IP address.
How to use Tornado Cash
Step 1 – Go to the Tornado Cash official website
Step 2 – Link your web3 wallet (usually eth wallet)
Step 3 – Select the cryptocurrency you want to deposit
Step 4 – Deposit selected crypto and copy the private key generated
Step 5 – Complete transaction and approve digital signature
Step 6 – Wait for some time and withdraw coins into several addresses
P.S: Be cautious with protecting the private keys generated, as failure to provide private keys to authenticate withdrawal could mean loss of assets.
What is Tornado Cash Token
The native token of tornado cash is TORN. The Torn token is an ERC-20 governance token of the Tornado Cash ecosystem and is used for voting rights during decision-making processes on the development of the project. The token has a fixed supply of 10 million Torn tokens, with 1.1 million in circulation at the time of writing.
The Torn token can be purchased and traded on several crypto exchanges, including Binance, Uniswap, Okex, Pancakeswap, etc.
The issue of privacy on the blockchain is becoming a growing topic of concern and some might say it might also be among the hindrances to mainstream adoption. Most users of the blockchain prefer a level of transaction privacy, which is where solutions like Tornado Cash come in for privacy and protection of transaction history.
However, recently, there have been several cases and accusations of Tornado cash used as a means for money laundering, especially for funds stolen by hackers.