What Is Tornado Cash?
Tornado Cash is a decentralized cryptocurrency mixing service that improves transaction privacy by severing the on-chain link between source and destination addresses.
Background
As an open-source protocol, Tornado Cash utilizes advanced cryptographic techniques to enable privacy-enhanced transactions across multiple blockchain networks. It came under scrutiny and was sanctioned by the US Treasury in August 2022 due to concerns over its use in laundering money for cyber crime.
How It Works
Users deposit cryptocurrencies into a communal pool on Tornado Cash and can later withdraw them to a different address. This process uses zero-knowledge proofs (ZKPs), allowing users to prove ownership of assets without revealing their identity or transaction details. The protocol, which operates on several major blockchain platforms, has evolved to include features like internal transfers within its shielded pool through its updated version, Tornado Cash Nova.
Five Key Takeaways
- Tornado Cash provides privacy for cryptocurrency transactions by mixing funds in a decentralized pool.
- It uses zero-knowledge proofs to secure and anonymize withdrawals, disconnecting the transaction trail.
- Available on multiple blockchains including Ethereum, Binance Smart Chain, and others.
- Tornado Cash Nova, an updated version, introduces additional features like internal transfers within the shielded pool.
- It was sanctioned by the US Treasury in 2022 due to concerns over its potential use in money laundering activities.
