Is Bitcoin Next After Tornado Cash? – Bitcoin Magazine

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Despite being an automated, decentralized version of a typical cryptocurrency mixer, Tornado Cash was sanctioned by the U.S. government last week as the Treasury Department’s Office of Foreign Assets Control (OFAC) added Ethereum addresses associated with the tool to its specially designated nationals and blocked persons (SDN) list.

Much has been written about the legal aspects of the Treasury Department’s move. Instead of embarking on –– arguably much needed –– advocacy to dispute the legal grounds of such a move, this article seeks to objectively explore the technical intricacies of Tornado Cash and its sanction, as well as evaluate potential risks that could bleed into Bitcoin in the future.

How Tornado Cash Works

At its core, a mixer receives users’ cryptocurrency deposits, which it pools or tumbles together before enabling each user to withdraw the same amount of coins it deposited. By doing so, users receive “fresh” coins that aren’t related to the ones they deposited, which can offer them a great deal of forward-looking privacy.

Most mixers are centralized, run by an entity or business that collects fees for the aforementioned services.



Source link Bitcoin Magazine

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