Was busy surviving the BEAR, but I am back with more content and stuff. Not that you care anon, but I do. WAGMI!
In today’s saga we are going to speak blenders and mixers , particularly about Tornado Cash and what is going on with it because for sure it got a lot of attention in the past days.
Mixers/Blenders- the TLDR on the Tornado Cash aka the Tornado of Souls
Crypto users are now spinning in the ether after reading the news that a software developer got arrested for writing source code for a famous crypto mixer called Tornado Cash. Tornado Cash is a mixer or blender that is used by individuals to safeguard their privacy and obfuscates transactions. While there are legal and illegal things one can do by using these applications, it’s crucial that we understand that an individual that just wrote the code (ALLEGEDLY), got arrested. And that speaks FUD to us. What will happen to developers of dapps, DeFi users, NFT buyers and no coiners out there?
So let’s go a bit deeper on the what, why, and how?
It all started with Satoshi Nakamoto creating Bitcoin and early adopters wanting to be sovereign, independent, and anonymous. Then ETH and all other cryptos were created and the storks brought the devs along. Devs decided to create dapps and these dapps included mixers like CoinJoin, Tornado Cash and Helix.
The Blockchain happens to be a public ledger meaning everyone can see what you do with your magic internet money. You bought an Ape for 80 ETH? How about a lambo? or you successfully levered that shitcoin to 10000X returns? Everyone saw it unless…maybe, but maybe you also want to keep your stuff private. What if you bought a subscription to a naughty site? I know no one does this over the internet and my imagination is going crazy now. But I am 1000% your wouldn’t want your employer, friends, spouses, partners etc find out. Cool so we got the why? Of course people illegally want to launder money, evade taxes and do evil stuff with the proceeds. So that’s the other why.
Developers created a transaction mixer that pools random transactions together. They did this by creating a smart contract that allows transactions to be received from on address and exits from a different address after passing by several channels. This eventually makes the transaction very difficult to trace and more private.
Tornado Cash Sanctioned
On August 8th the US Treasury Sanctioned Tornado Cash under for helping facilitate Money Laundering and illicit activity. The total amount since its inception has been USD 7 Billion and almost USD 500 million from the North Korean Lazarus Group. Ultimately these sanctions are enforced by the US Government and they will block or get anyone that interacts with these addresses in big trouble aka
To add hurt to injury they also arrested a developer on Friday that was a developer on Tornado Cash. This has been controversial because while the coder has not engaged in anything illegal he helped support the platform and crypto twitter is seeing it as an attack on free speech.
So is the borderless, trustless, nature of crypto over?
Well certainly now all eyes are on crypto regulation, technology is smarter, and governments are now paying attention due to the explosion in value and users of this tech. Any company, centralized or decentralized (that wants to be in compliance) must now block crypto transfers from the designated addresses related to Tornado Cash or face fines/jail time. We still need to monitor what will happen to the legitimate users of the platform who now face an uncertain future.
This leaves thousands of users in limbo, imagine learning about Tornado Cash and testing the app with 10 USDC, or writing programming language to support the application, or trying to anonymize your large NFT flipping profits. You might be screwed.
Crypto by nature is P2P, Decentralized, Trustless…however its biggest challenge is you need internet. The internet is highly centralized and it still powered by cable networks meaning that big telecoms rule the access of billions across the world. Now as a simple internet user, your browser and websites you visit gather date to “serve you better.” This is why amazon wants to sell you golf clubs after you watch a Tiger Woods video or you get cat related stuff after you google “cute cats” on the web. Yes, there is internet via satellite and Web3 (but we can talk about that later, yet it doesn’t address the pipes). Thus, the internet is also prone for government regulation and interference.
Remember any new protests or the most recent ones in China ?
Well the chinese government is blocking people from posting, rumours of YouTube shadowbanning the events and more things are happening. So when the US Treasury can attach and shut down a crypto mixer think about it. A lot of chain analysis might be required, but they also scan metadata from your devices, track VPNs, look for servers, and search both the regular and dark webs. Not to sound alarmist here, but Big Bro is watching.
Of course there are ways around being traced in the internet via TOR , encrypted communications, etc. and people with a special set of skills can achieve this.
Anyways to conclude every crypto participant that wants in the game either as a miner, staker, trader, hodler, node operator must at least connect to the internet once. Some eventually move their stuff to cold storage which is max safety and privacy, but nowadays being private in the web becomes more challenging.
With Tornado Cash there is so much in limbo and a new precedent being set. This is because smart contracts cannot be censored, thus the US Treasury resorted arrest people and flag specific wallet addresses that are now being blocked by other applications. On the other hand you see a current user sending crypto via Tornado Cash to notable people included Jimmy Fallon, Logan Paul and even crypto executives.
In this game of decentralization and centralization, the script is still being written. Will the will of the people seeking privacy and freedom prevail or will big government do its thing?
As I see it, magic internet money will prevail as it goes more mainstream. Yes governments will try to attack, intervene, and regulate. Which regulation is great if you want to be an investor or institution, but what if you are the little guy?
A lot to think, but hey one thing is sure the masses are here and crypto shall prevail.
Tags: bitcoin cash crypto digital mixers money OFAC sanctions Tornado Cash wagmipto