To bitcoin enthusiasts, the advantages of cryptocurrency are obvious: It’s a global, decentralized financial network that no government or centralized entity can control.
But bitcoin is also incredibly transparent. That’s by design. The system relies on a public ledger—an accounting of every single transaction that is visible and trackable to all, including government authorities who want to monitor and control the use of cryptocurrency.
Currently, U.S. law requires cryptocurrency exchanges—essentially marketplaces for buying, selling, and trading various forms of cryptocurrency—to collect personal information about the traders who use their networks.
Those exchanges are also vulnerable to pressure from governments who might want to freeze transactions or shut down accounts.
Not surprisingly, this has inspired workarounds to help crypto users maintain financial privacy. Software programs known as “mixers” scramble the ledger, blending unrelated transactions in order to help make cryptocurrency use more difficult to track.
One of those mixers is a program known as Tornado Cash.
Earlier this month, the U.S. Treasury Department announced that it was adding Tornado Cash to the U.S. sanctions list, thus prohibiting all transactions using the software. The Treasury Department claims Tornado Cash is the equivalent of a high-tech weapon that could be used by terrorists or foreign rivals. But others say it’s just code, a software tool no different than any other.
That’s the topic of this week’s episode of The Reason Rundown With Peter Suderman, featuring Reason Senior Producer Zach Weissmueller.
Mentioned in this podcast:
“The Canadian Government Couldn’t Stop Bitcoin,” by Zach Weissmueller
“Bitcoin Can Become Untraceable.,” by Zach Weissmueller and Danielle Thompson
“The Tornado Cash Crackdown is an Attack on Free Speech and Privacy,” by Zach Weissmueller and Danielle Thompson.
Audio production and editing by Ian Keyser; produced by Hunt Beaty.