Privacy is a big concern in the crypto world. As many of you know, there are plenty of transactions that take place on decentralized networks where users do not have any sort of protection from prying eyes. This is totally understandable since those networks were designed to be permissionless and decentralized. However, this leaves quite a few people feeling uneasy about their privacy when interacting with these protocols. Today we will discuss how Tornado Cash aims to solve this problem by offering private transactions for all!
Blockchains provide anonymity
With the advent of the blockchain, people were able to develop open and decentralized transaction ledgers that allowed for peer-to-peer value exchange. This was revolutionary because it broke down some of the barriers between users who may not have been trusting each other and made them transact with one another without a third party involved in order to enforce rules or regulations in an attempt to keep the system honest.
This is great because it allowed for many different types of transactions to take place without the need for a third party or intermediary. You do not need to prove your identity in order to send or receive transactions on a blockchain. This is all thanks to cryptography and the fact that once data has been written onto a blockchain it cannot be erased without destroying the entire ledger (which can only happen through consensus).
Blockchains do not provide privacy
While this means anonymity for users participating in decentralized networks, it has serious drawbacks for people that wish to remain private when using these protocols.
The thing is, once a transaction takes place on the blockchain it becomes public knowledge and can be seen by anyone who wants to take a look at them. There are some projects out there trying to solve this problem via zero-knowledge proof systems, which allow for transactions to take place with the information of those involved remaining confidential.
Privacy is a big concern in the crypto world. As many of you know, there are plenty of transactions that take place on decentralized networks where users do not have any sort of protection from prying eyes. This is totally understandable since those networks were designed to be permissionless and decentralized. However, this leaves quite a few people feeling uneasy about their privacy when interacting with these protocols.
One concern is that if cryptocurrency became a ubiquitous way to pay, marketing companies could target users based on the types of transactions that they are making. This would allow them to figure out your preferences and sell you products accordingly, which is a big invasion of privacy.
Today we will discuss how Tornado Cash aims to solve this problem by offering private transactions for all!
Also Read: Is Bitcoin Legal In Nepal?
Zero-Knowledge Proof Protocols
There are a lot of different privacy protocols out there trying to offer a solution for the lack of confidentiality that comes with decentralized networks. One such protocol is Zk-Snarks, which allows users to send and receive transactions without actually revealing any private information about them or their transaction history. It uses zero-knowledge proof systems in an attempt to prove things like how many tokens you have, what address they are going to, or that a transaction has taken place without actually revealing any of the information regarding those transactions.
Tornado Cash’s Solution – Private Transactions for All!
Zk-Snarks is what powers Tornado Cash’s private transactions. This protocol essentially allows you to prove that something happened without revealing the information of those involved in the transaction or how many tokens were transferred from one address to another during a given time period.
Tornado Cash brings the power of zk-Snarks to the Ethereum blockchain in order to provide private transactions for all. This means that anybody using the Tornado Cash network will be able to send and receive tokens without having their identity revealed on a public ledger, which is great news if you are looking for privacy and are wanting to use Ethereum to do so and not lesser-known and more volatile solutions like Monero or Zcash.
How it works
The way that Tornado Cash has made all of this work on the Ethereum blockchain is by creating a Smart Contract that holds all of the information that would normally be available on a public ledger. Tornado Cash uses zk-Snarks to prove certain aspects of what’s going in and out without revealing private data like balances, transaction history, or how many tokens are being sent.
The smart contract takes the deposit and appends it to the list of other deposits contained in the contract. The user is then given a secret key that only they know about and can use to create a transaction.
Tornado Cash Relayers
If someone wants to make a withdrawal of their tokens they can then create a transaction with a Tornado Cash Relayer using the secret key that was given to them when their deposit first took place. This is how Tornado Cash works: it allows for transactions to take place without revealing information about those involved, which means your identity can remain confidential while you are interacting with decentralized networks like Ethereum. You can use these cash relayers to withdraw to any Ethereum address which is great because it means you will not be restricted to using wallets that are already tied to your identity.
Who Controls Tornado Cash?
The Tornado Cash Contract was created using a trusted setup ceremony, which means that there is no central entity controlling the network. This trustless setup allows for a completely decentralized network to exist and have transactions take place on it without any privacy concerns.
The ceremony relies on what is known as multi-party computation, which means that multiple parties are involved in creating the secret key that is used to create a contract. This means that because several different parties were involved in creating this contract, nobody can access it or take control of it, and the developers of Tornado Cash have destroyed their share of the secret key. With the developers unable to recreate the secret key, nobody can access any of the information that is stored on this contract.
This ensures that everyone involved in creating a transaction via Tornado Cash cannot reveal private data like balances or transactions to anyone else and ensures a community-controlled system.
Long Story Short
The Ethereum Public Blockchain has provided a level of anonymity for those using it, but privacy in the crypto world is still a huge concern. Tornado Cash has created a decentralized and trustless solution for providing private transactions for all users of Ethereum’s Blockchain without compromising the security of the network, so when used together this provides both anonymity and privacy.