<p dir="ltr">On August 8, the Treasury Department sanctioned Tornado Cash for assisting hackers in laundering over $7 billion in virtual currency. According to the agency, the mixing service let cybercriminal groups, including North Korean-backed hackers, utilize its platform to launder online fraud proceeds. The crypto community is divided on whether the ban jeopardizes members' ability to operate anonymously. The best way to find out is to make a deep dive into <strong>Tornado Cash</strong> and analyze its past activities with&nbsp;<a href="https://www.builder.news/" alt="Builder.news website" title="Builder.news website" target="_blank" rel="" class="">Builder.news</a>!</p><p class="prosemirror-p-center"><img src="https://cdn.builder.news/news/11ed1e00cbbfab40a8e6023f659fee92.jpg" alt="Tornado Cash" title="Tornado Cash" width="600" height="336"></p><h2>What is Tornado Cash?</h2><p dir="ltr"><strong>Tornado Cash</strong> (TORN) is an Ethereum-based decentralized and non-custodial privacy solution. Tornado Cash was built on open source research by the Zcash team (a privacy token), and it allows users to transfer ETH and ERC-20 deposits through its smart contract application.&nbsp;</p><p dir="ltr">The TORN protocol is controlled by the community; the Tornado Cash team gave up control of the protocol's multi-sig wallet in May 2020 via a contract change known as a Trusted Setup Ceremony. Tornado Cash is now regarded as a completely decentralized protocol, and the founders have no influence over it.</p><p dir="ltr">The Tornado Cash token (TORN) is an ERC-20 token with a limited supply that allows holders to propose and vote on protocol updates. As they interact with the protocol, Tornado Cash users earn Anonymity Points, which are then put into a protected account. When users have accumulated enough Anonymity Points, they can swap them into TORN tokens through a similarly secure mechanism.</p><p dir="ltr">Shortly before the US sanction on Tornado Cash, TORN market cap fluctuated between $42m-$64m. After the sanction had been announced, the <strong>Tornado Cash price</strong> plummeted to $22 (down 28% in just a day). The following days continued to witness TORN’s fall and it is now a low-cap token as a result. There have been many rumors around Tornado Cash price prediction after some recent events. However, the market is always up and down, so people should do their own research so as not to fall into any crypto trap.</p><p class="prosemirror-p-center"><img src="https://lh4.googleusercontent.com/mQPdf75tXgBOCbt5wir5Pn9nsI03FfD_ZsbmhdnULYDwC3HCSjeIEPdq_qfXtMog0SrvOkH14xINVT00hKIXeBznPdXV2jO24PG76BDta9oc4Urt26f1Hx2VvvNBV2wgr5hPNKeul1ealV31IkWXyb4" alt="TORN price" title="TORN price" width="624" height="400"></p><p class="prosemirror-p-center"><em>Source: Coinmarketcap.</em></p><h2>How does Tornado Cash work?</h2><h3>Tornado Cash mechanism</h3><p dir="ltr"><strong>Tornado Cash</strong> combines transactions with zero-knowledge proofs, which totally obfuscate their details. It essentially increases transaction anonymity by severing the on-chain link between a source and a destination address.</p><p dir="ltr">To maintain privacy, it allows token deposits from one address and enables withdrawals from another using smart contracts. These smart contracts work as pools that pool all cryptocurrency deposits.</p><p dir="ltr">When a person gives money to a pool, a private note is written. This private key acts as the user's private key for later access to funds.</p><p dir="ltr">When a user wants to withdraw money from those pools using a new address, there is no on-chain relationship between the source and the destination. As a result, the removed crypto-assets have become anonymous. Users retain ownership of their tokens when participating in a Tornado Cash pool. Consequently, users have full control over their crypto tokens.</p><h3>How to use Tornado Cash?</h3><p dir="ltr">If you want to use Tornado Cash Crypto Dapp, you must first fund Tornado Cash, which will then produce a random key and deposit your ERC-20 tokens. To make a withdrawal later, you will need to provide proof that you have a valid key. Like the contract deposit, the Tornado Cash transaction and Tornado Cash fees of gas will also need to be confirmed in MetaMask.</p><p dir="ltr">You can withdraw funds using a <a href="https://www.builder.news/crypto-insights/6-best-web3-wallets-for-investors-to-use" alt="6 best Web3 wallets for investors to use" title="6 best Web3 wallets for investors to use" target="_blank" rel="" class="">cryptocurrency wallet</a> such as MetaMask or through Relayer. If you decide to utilize a wallet, make sure to construct a fresh address in order to maintain your anonymity. Another option is to utilize Relayer, which prevents the transaction from being publicly tied to you on the blockchain; after you construct a new Ethereum address, Relayer will deposit your assets and charge you a network fee in ETH.</p><p dir="ltr">When you've determined how you want to withdraw your funds, enter the secret of your deposit and select the "Settings" tab. You'll select and save a wallet option here. Then simply enter your address and click "Withdrawal."</p><h2>Is Tornado Cash that evil?</h2><p dir="ltr">As we can conclude from the mechanism and usage, Tornado Cash is extremely beneficial if you appreciate your privacy or if you intend to engage in illegal transactions.</p><p dir="ltr">On Monday, August 8, US Treasury Department imposed sanctions on this protocol for the latter reason. The US Treasury cites unlawful money laundering as the reason for sanctioning Tornado Cash, citing the North Korean-linked Lazarus Group hackers who have laundered approximately $561m through Tornado.</p><p><em><strong>&gt;&gt;&gt; You might also concern:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/defi-hacks-and-heists-hsfBc" alt="10 biggest DeFi hacks and heists" title="10 biggest DeFi hacks and heists" target="_blank" rel="" class=""><em><strong>10 biggest DeFi hacks and heists</strong></em></a></p><p dir="ltr">For clarification, since Tornado Cash is an open-source protocol made of smart contracts, the sanction imposed on it nearly means nothing. It is more like banning people from using the protocol. If you use the protocol then you go against the laws. As a result, many platforms swiftly isolated themselves politically:</p><ul><li><p dir="ltr">Circle, the company that issues USDC, has begun blacklisting wallet addresses that interacted with the Tornado Cash contract. This has sparked conversations in the Maker community about reducing DAI's dependency on USDC and completely decoupling the stablecoin from the dollar.</p></li><li><p dir="ltr">Tornado Cash's source code has been taken from Github, and source contributors have been blocked (hence the need for decentralized alternatives like Radicle).</p></li><li><p dir="ltr">RPC requests to Tornado's frontend have been blocked by Infura and Alchemy, two centralized service providers that allow access to on-chain data. Pocket Network, its decentralized equivalent, has also barred the sanctioned set of wallet addresses from visiting its Web Portal.</p></li><li><p dir="ltr">dYdX is also barring users whose wallet assets have dealt with Tornado directly.</p></li></ul><p dir="ltr">The situation seems to be really bad for Tornado Cash. However, as it was designed for good purposes, let’s have a fair assessment.</p><p dir="ltr">When we look at Tornado's activity since its introduction in 2019, we see that just 10.5% of all transactional volumes were associated with stolen funds. If you believe 10.5% ($700m+) is a lot, you're wrong.</p><p class="prosemirror-p-center"><img src="https://lh4.googleusercontent.com/2-olgA-vXNyOtj43Mz3coMxvWfUe8pDAgzTACu4qSc7-hukN09LRIYK62UINc74bROtV1WoDjcLN014XaxiwAl0cUQVCg7rqazmHaFgn_oCZv6n-tckqWXkzUtbLsuA4nGH6CRJ8glE-Cj2o6Q1aakA" alt="Cryptocurrency received by Tornado Cash" title="Cryptocurrency received by Tornado Cash" width="624" height="420"></p><p class="prosemirror-p-center"><em>Source: Chainanalysis.</em></p><p dir="ltr">According to Chainalysis data, illegal transactions accounted for only 0.15% of total cryptocurrency volumes in 2021 (despite the fact that the business was booming). That is how infrequently cryptocurrency is employed in illegal conduct.</p><p class="prosemirror-p-center"><img src="https://lh5.googleusercontent.com/Wkj1Xb1zXsFVTicVT2gU2vpj2f6OYsUrJO6wB1Hv8Ag6Ew1qyBbWHf0q0e8DczxAOcYx76kKkK4xoCPr4mlqdrug1f2THdgK5P5JpO-2OAfioRs8s3_ZN_E1B6ktSPZILDwkbP8c22NkT14fSFaHajI" alt="Is Tornado Cash that evil?" title="Is Tornado Cash that evil?" width="624" height="332"></p><p dir="ltr">And that is a drop in the bucket compared to the amount of fiat that gets laundered annually, which the UN estimates to be between $800b and $2T.</p><p dir="ltr">If governments are concerned about unlawful money laundering, there are many more serious issues to be concerned about than a mixer like Tornado. Sound public policy focuses on the middle, not the edge, and unlawful money laundering in Tornado is the consequence of the bad security of the hacked chains, not the norm. So authorizing a crypto mixer because it facilitates criminality is a fairly shaky reason. <strong>Tornado Cash was born to serve privacy and it did the mission really well. </strong>Tornado Cash may be taken down but the question is “does it solve anything?” since there is a great chance that there will be a fork version of it. After all, Tornado Cash is not as evil as it was depicted by the media.</p><p><em><strong>&gt;&gt;&gt; You might be interested:&nbsp;</strong></em><a href="https://www.builder.news/crypto-insights/metrics-in-defi-v3cNi" alt="How to understand and use the metrics in DeFi" title="How to understand and use the metrics in DeFi" target="_blank" rel="" class=""><em><strong>How to understand and use the metrics in DeFi</strong></em></a></p><h2>3 most-known Tornado Cash alternatives</h2><h3>UniJoin</h3><p dir="ltr">Unijoin is a mixing service that uses CoinJoin technology to combine transactions in the pool. It currently only accepts Bitcoin transactions, but it intends to include Ethereum, Litecoin, and Tether mixing services into its platforms in the future. The platform's usability is one of its key characteristics. The site is also simple to use for newcomers.</p><h3>ChipMixer</h3><p dir="ltr">ChipMixer is one of the most dependable cryptocurrency mixers, giving customers complete control over the mixing process while not even changing service fees. It also allows you to store mixing sessions and resume from where you left off. This <strong>Tornado Cash alternative</strong> also supports a wide range of chip sizes, from 0.001 BTC to 4.096 BTC tokens, allowing users to place wagers using the specified chips.</p><h3>Anonymix</h3><p dir="ltr">Anonymix is another famous <strong>Tornado Cash alternative</strong>&nbsp;that has a plethora of functions and is user-friendly. The best feature of Anonymix is its speed and security. It is a large-capacity mixer that stores crypto assets both hot and cold. The mix can handle more than 180 BTC tokens at once. By making deposits from several wallets, the platform may additionally strengthen the security of the mix.</p><h2>Conclusion</h2><p dir="ltr">Crypto mixers are a technology that may be employed to improve user privacy and increase the secrecy of bitcoin transactions. People who want to make their transaction history more secret or who want an extra degree of security from outside parties who might have access to their personal information might find this useful.</p><p dir="ltr">However, some mixers have a history of being used fraudulently to launder money and might not follow FinCEN-mandated regulations. Some mixers can differ in their authenticity and capacity to conceal financial activities, and some have minimum and maximum limits per transaction. There are alternatives to mixers including privacy-focused cryptocurrencies like Monero, which among other things use stealth addresses to conceal the sender, recipient, and amount of each transaction.</p><p dir="ltr">The important point here is the market demand for privacy. Wherever there is demand, there will be products. No one is sure about the future of <strong>Tornado Cash</strong>. However, we can rest assured that the crypto mixers (or at least their alternatives) are here to stay.</p><h2>FAQs about Tornado Cash</h2><h3>Who are the creators of Tornado Cash?</h3><p dir="ltr">Roman Semenov and Roman Storm created this coin mixing business. Blockchainlabs.nz, Amazon, PepperSec, and a variety of DeFi initiatives such as 0x, Aave, Compound, MakerDAO, and 1inch are among his prior employers. Across these firms, he was involved in the auditing of Solidity code, the development of <a href="https://www.builder.news/crypto-insights/blockchains-backbone-to-call-smart-contracts-InrUS" alt="Blockchain's backbone to call Smart Contracts" title="Blockchain's backbone to call Smart Contracts" target="_blank" rel="" class="">smart contracts</a>, and the creation of ERC-20 tokens.</p><h3>Is Tornado Cash legit?</h3><p dir="ltr">Yes. The protocol is entirely decentralized and created to offer financial privacy. The founders are additionally active on social media. Additionally, the protocol and smart contracts have undergone audits.</p><h3>What is anonymity mining in Tornado Cash?</h3><p dir="ltr">Mining pool deposits would be public, negating Tornado Cash's secrecy feature. Anonymity mining protects users from this by generating Anonymity Points every time they deposit any token to Tornado Cash.</p><p dir="ltr">The points are then moved to a special shielded account, which hides the deposit balance and wallet address from the public eye. After reaching a particular threshold, the user can exchange Anonymity Points for TORN tokens.</p><p class="prosemirror-p-right"><em><strong>Written by Blue Pine</strong></em></p><div class="pr-block-special"><strong>Disclaimer:</strong><br>This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

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