Tornado Cash is a fully decentralized protocol for private transactions on Ethereum.
What problems does Tornado Cash solve?
Tornado Cash helps solve the privacy problem on Ethereum.
Whenever you buy or sell on Ethereum, your transactions are public. With the right resources, an observer can connect you to a wallet address which they can then track using Etherscan.
Tornado Cash improves transaction privacy by breaking the on-chain link between source and destination addresses.
It utilises smart contracts that accept deposits made in ETH and other tokens that are then withdrawn to other addresses. Since the withdrawal is made from the project’s smart contract liquidity pools, there is no way of knowing who the original sender is.
How does Tornado Cash work?
Transactions are mixed using zero-knowledge proofs, and these completely obfuscate the transaction information. No centralised third party can take custody of the funds during the mixing process.
Tornado Cash generates a secret hash each time a user deposits assets.
Their smart contracts then accept the deposit along with the hash, called a commitment. The commitment’s purpose is to identify the real sender and prove during the withdrawal process that the user in question owns the assets.
By inputting the accurate hash, the user confirms his identity while remaining anonymous on-chain to everyone else.
Is Tornado Cash safe?
Smart contracts audits are one of the way to determine whether a platform is safe.
In December 2019, Tornado Cash contracts were audited by blockchain firm ABDK Consulting. It was analysed by Ethereum Foundation researcher Dmitry Khovatrovich. No critical issues were found during the security audit and all major issues were resolved.
The project was audited again a year later by Pessimistic. Pessimistic’s report found only minor issues and one low-level governance exploit that prevented users from voting. All problems were rectified after the audit.
As a result, Tornado Cash is deemed to be safe and secure for use.
How to use Tornado Cash
Let’s go through a step-by-step guide on using Tornado Cash and take a look at what you should do in order to deposit and withdraw assets safely from the Tornado Cash mixer.
1) Visit Tornado.Cash and launch app
Given the number of phishing sites and scams these days, always check to make sure you are on the official Tornado Cash website.
To find the mixer, click on “Launch App” as demarcated by the red arrow.
2) Connect your wallet and pick an ERC20 asset
Connect your MetaMask or any compatible wallet with the app and select the token that you wish to deposit. Currently, users can choose between ETH, DAI, cDAI, USDC, USDT and WBTC.
3) Deposit your asset and save your note
Next, select the amount that you wish to deposit before clicking on “Deposit”.
Write down the note and store it in a secure place before clicking “I backed up the note” and “Send Deposit”.
The next move is to wait. The amount of time you choose to wait depends on yourself. Users should wait at least 24 hours before withdrawing for favourable results. The longer you choose to wait, the safer it becomes.
It is likely to be from the same address if a deposit is quickly followed by a withdrawal. It is easier for an observer to make a connection if a batch of deposits comes from one address, and shortly after, there is a batch of withdrawals going to another address.
After waiting long enough, you can go ahead and withdraw your assets.
Input the note you have previously written down and your other crypto wallet address.
You will receive your assets back after clicking on “Withdraw” and paying for the gas fees.
Hardly anyone will be able to track down the owner of the funds as there is no transaction linking the two.
Is Tornado Cash a good privacy solution?
Given its rate of adoption, Tornado Cash has great security with no history of exploits thus far.
The downside to this is that there is a dark side to it. The top DeFi hackers patronise Tornado Cash and use it as a money laundering service.
However, privacy isn’t just for criminals. There are actual reasons for users to transact online in complete privacy should they choose to do so in anonymity.
To conclude, it is safe to say that Tornado Cash is one of the leading privacy solution in the crypto space and will only see more traction in time to come.
Featured Image Credit: Tornado Cash