Key Takeaways
- Tornado Cash is decentralized, non-custodial protocol that helps crypto users stay private on public blockchains.
- It uses a smart contract that lets users send deposits from one address and then withdraw the funds from to another completely new address, thus breaking the on-chain link between the funds.
- The latest version of the project supports arbitrary amount pools and shielded transactions, allowing users to leverage the protocol as a designated private wallet.
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Tornado Cash is a decentralized, non-custodial privacy solution for Ethereum and other smart contract-enabled blockchains based on ZK-SNARK technology. It lets users break the links in their on-chain activity to improve their privacy.
Understanding Blockchain Privacy
Tornado Cash is a non-custodial protocol that lets users send ETH and other cryptocurrencies to a smart contract on Ethereum using one address and then withdraw the tokens using a different address, thus breaking the link between the deposited and the withdrawn funds.
To understand Tornado Cash’s value proposition, it’s first essential to dispel the myth of private cryptocurrency transactions. On-chain privacy on public blockchains like Ethereum is essentially non-existent, as anyone can track the blockchain’s public ledger to inspect the entire transaction history of any wallet. In fact, blockchain analytics firms like Nansen are in the business of doing just that. Nansen analyzes the Ethereum blockchain, flags specific wallets and smart contract addresses, translates the insights into human-understandable form, and then sells this tooling to crypto investors looking to make better-informed trading decisions based on the on-chain data. Other blockchain analytics firms like Chainalysis scrutinize public blockchains and work with governments to flag, track, and de-anonymize certain transactions and accounts associated with illicit activities.
While public blockchain addresses do not reveal…
