Friday, May 24

How tornado cash enhances cryptocurrency privacy?

The process works like this: users send their cryptocurrency (Ether or any ERC-20 token) to an intelligent Cash Tornado contract. The smart contract then mixes the user’s funds with other users deposited into the contract when they want to withdraw their funds from a different Ethereum address, breaking the link between the original sender and the final recipient. To ensure privacy, Tornado Cash uses a cryptographic technique called zero-knowledge proofs. This allows users to prove that they have the right to withdraw funds from the contract without revealing which specific deposit corresponds to their withdrawal. As a result, an outside observer traces the flow of funds through the mixer, preserving the anonymity of all participants.

Benefits of using tornado cash

  1. Enhanced privacy

By breaking the link between sender and recipient addresses, Tornado Cash makes it much harder for outside observers to trace the flow of funds on the Ethereum blockchain. This is valuable for users who want to keep their financial transactions private, whether for personal, political, or security reasons.

  1. Protection against surveillance

Increasing government surveillance and data collection and tools like Tornado Cash protect users’ financial privacy from unwanted scrutiny. By obfuscating the trail of transactions, Tornado Cash makes it much harder for authorities or other third parties to monitor or track an individual’s cryptocurrency activity.

  1. Fungibility

The critical property of money is fungibility, meaning that any one unit of the currency is interchangeable with any other unit. However, the transparent nature of most cryptocurrency blockchains undermines this property, as coins are “tainted” by association with illicit activities. By mixing funds and breaking the link between transactions, Tornado Cash helps to restore fungibility to Ethereum and other cryptocurrencies.

  1. 4. Compliance with regulations

 While some may associate privacy tools with illicit activities, helps legitimate users comply with financial regulations. For example, a user who makes a private donation to a charitable organization or political cause uses Tornado Cash without revealing their identity while complying with applicable reporting requirements.

  1. Improved security

By keeping their transaction history private, users reduce their risk of becoming targets for hackers, scammers, or other malicious actors who might try to exploit information about their cryptocurrency holdings or spending patterns.

Tornado cash works under the hood

To appreciate the power and sophistication of Tornado Cash, it’s worth taking a closer look at the cryptographic techniques that make it possible. At the heart of the system is the concept of zero-knowledge proof, which allows users to prove a statement (in this case, that they have the right to withdraw funds from the mixer) without revealing any additional information. Tornado Cash uses a type of zero-knowledge proof called a zk-SNARK (zero-knowledge Succinct Non-interactive Argument of Knowledge). This allows the smart contract to verify a user’s withdrawal request is valid without learning which specific deposit corresponds to. The cryptographic proofs are generated off-chain, which helps to keep gas costs low and enables faster transaction processing.

To further enhance privacy, Tornado Cash also incorporates a technique called “shielded pools.” These are separate intelligent contracts that hold deposited funds and allow for private withdrawals. By dividing the mixer into multiple pools, each with its cryptographic keys, Tornado Cash makes it even harder for an outside observer to trace the flow of funds between different users.