The hottest narrative in the market right now is "privacy". Privacy coins like L1 (Zcash, Monero..) that hide transactions to obscure the sender/receiver, or mixers utilizing ZK (Tornado Cash, Railgun..) have been heavily suppressed due to regulations. In 2023, many privacy coins that were already listed on most CEXs were completely delisted. However, as movements advocating for the legitimacy of privacy on the blockchain centered around Ethereum are growing, the market is shifting in an unfavorable direction for privacy. The Ethereum Foundation even released the "Ethereum Privacy Manifesto" through its official blog. Despite regulatory suppression, Ethereum has consistently asserted the importance of privacy. (In fact, Vitalik is a regular user of Railgun and even donated 50 ETH to help the Tornado Cash developers with their lawsuit.) The most critical technology for privacy on the blockchain is ZK. Most privacy projects, such as Zcash, Railgun, and Tornado Cash, are implemented using ZK technology. As the importance of privacy increases, the necessity for ZK proof projects like @brevis_zk will also grow. Additionally, to prevent privacy leakage from the Prover generating ZK proofs, TEE will once again come into focus. Ethereum is for Privacy.
Let's learn about Coin Mixing and Tornado Cash in Tier 0 - The dark realm of ZK These days, it seems that positive sentiment towards ZK is being formed a lot due to Succinct and @boundless_xyz. Moreover, Ethereum is planning to overhaul all aspects of consensus and execution based on ZK. In fact, ZK is also the most promising technology that can break the limitations of blockchain, which is that "decentralization must sacrifice performance." However, in reality, ZK has been playing a very important role in blockchain for longer than one might think. That is "money laundering." The most prominent (?) project in this field is Tornado Cash. The operation process of Tornado Cash is as follows. (1) Preparation Tornado Cash creates a pool worth 100 ETH. (2) Deposit Users who want to launder money deposit a fixed amount (e.g., 1 ETH) into the pool created by Tornado Cash. At this time, a secret random value and its hash are stored together in the contract. (3) Mixing Since multiple users have deposited the same amount into the pool, the contract will mix the same amounts together. (4) Withdrawal Users who want to withdraw use the secret value created at the time of deposit to generate a ZK proof that says, "I am one of the people who deposited into this pool." This proof does not reveal what the depositor's address is, but only proves that they are one of the people who deposited 1 ETH into that pool. When a new address uses this ZK proof to withdraw, the depositor and the withdrawer are separated, hiding who sent what to whom. In other words, the coins are laundered. (One cannot hide that they are an account that has deposited and withdrawn assets through Tornado Cash.) Tornado Cash operates in this way by receiving multiple identical deposits, mixing them, and proving through ZK. Thus, ZK has been consistently used in private blockchains like ZCash due to its privacy characteristics and has also been actively used in mixers for money laundering like Tornado Cash. Rather, it can be said that it has only recently emerged as an alternative to solve the blockchain's trilemma problem due to its characteristics that minimize trust and compress data. + Tornado Cash makes it impossible to trace the flow of assets, which led to OFAC sanctioning it, making it illegal in the U.S. at one point. However, in November of last year, the sanctions were invalidated by a ruling stating, "Smart contracts are not property, so they are not subject to regulation." In other words, using Tornado Cash itself is no longer illegal.
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