Wonder when they will attempt to go after the biggest mixer of all: Monero itself, I often wonder if that's the sole reason CoinBase refuses to add it to their exchange, to avoid the legal hell that would ensue.
Tornado is a straight up money laundering (specifically, layering [1]) service. Monero can be that. But it's also other things, which makes it at the very least defensible in a way someone interacting with Tornado is not.
A weakness of Ethereum is that it's difficult to obscure how much money you have, but Tornado can untraceably separate your cold wallet from your hot wallet. That's a totally legitimate use. While it's used a lot for money laundering, TC is morally agnostic, just like real cash.
This is an important use case. I suppose according to these new rules, in the long run you'll be only allowed to use the government's mixer. Which would provide some anonymity at least until the logs are hacked or the service is privatized.
I don't think it's fair to say it's exclusively used for money laundering, it surely can be used to obscure the origin of funds but I think 'money laundering' label requires that the motive be financial profit. If you just want to preserve privacy while interacting with ethereum network without financial gain, tornado is a great tool to accomplish that.
I assume by my downvotes that the sarcasm was missed.
Funnily enough, Congress already passed a mandatory kill switch law for automobile manufacturers. Supposedly for stopping drunk drivers. You already know it'll be used for any purpose the police see fit. Once they have the ability, there's no reason not to.
Generally when this happens, I assume services allowed/permitted by the fed are backdoored to the fed's advantage. Monero could be an excellent example.
It's the tech they they haven't backdoored that poses a threat to their surveillance/control model. Tech like Tornado.
Another possibility is they want to keep eyes off tech that people would go to in droves if they outright banned it. They want to avoid the Streisand effect. Part of that play is indeed making people think it's already backdoored. There is a big push to promote that narrative. Whether it's true or not, who knows!
Exactly. Monero's ringct model is easy to break statistically given some resources. Fees aren't that high. It's practical for a state to know 75+% of spent outputs by a combination of exchange info exchange and spamming. In addition there's zero output privacy (meaning honeypot->suspect->exchange creates extremely strong links when repeated).
The anonymity set is the best theoretically possible - everyone in the shielded set. It's the same for zk.money and tornado - the difference compared to tornado is that tornado has fixed amounts.
There's no possible attack to deanonymize the full zero-knowledge model beyond the utilization of always existing metadata - which needs separate solutions for every such system. In practice, zcash doesn't have that many users, so the anonymity set isn't big, but that's a separate issue to technology.
The question which one is better in practice right now is a more complex one. Even a perfect solution like zcash/zk.money is useless if (just a random number) only 3 people use it, and ringct with (again a random number) 100k separate people with roughly equal tx count would obviously win. My estimate is that tornado.cash is the most anonymous. Monero is hard to estimate because there's no way to know how many spent outputs are known to the American government and/or cooperating chain analysis companies. Is it <1%? Then it's probably second best. Is it 90%? Run away.
Last but not least monero can be deanonymized retroactively by quantum computers. Tornado, zk.money and zcash can't - they can be robbed (monero can be robbed too, obviously) but that's a much better failure mode.
Monero is not a mixer. It uses ring signatures: a transaction may have been signed by any number of signatures, there's no way to determine which key was responsible.
