There's been a tectonic shift in the prevailing narrative in the past couple days. You know what this is.
You knew what this was when you were reading my title.
This is going to be about Tornado Cash, and why you shouldn't sacrifice privacy for convenience. The biggest argument has arisen over financial privacy and its role in living in the 21st century. Let's take a walk back in time to a much, much simpler time (the internet didn't exist back then).
In 1776, the predominantly-European settlers, who had formed 13 distinct colonies along the Atlantic Coast of North America, declared their independence from the British Empire. It was the culminating moment in the American Revolution, morale was never higher. Freeing yourself from the bondage of others is a good thing. The only problem is, slavery doesn't just take a physical form. There is psychological slavery, emotional slavery, and of course, financial debt slavery.
Let's talk about that last one, in this piece, as LeoFinance is a financial-focused community, first and foremost. Debt has existed for thousands, if not tens of thousands of years. Usury was viewed as an immoral, un-Christian, and unethical, as it was seen as the theft of other people's wealth by a particular group of people. Let's call them bankers, regardless of what country you live in. The people who run banks, charge customers interest on loans, to make money. It's one of the central tenets of central banking systems since they were first thought up.
Regardless of one's view on banks, this much is clear, they exert an unreasonable influence over how everyone lives their lives. I'm not arguing for the abolition of banks as a concept, I'm not some anti-banker, I believe the responsibility for one's "money" is on the individual, no one else. Within the cryptocurrency community, the phrase "Not Your Keys, Not Your Crypto" is a popular mantra, and for good reason. If you do not control your own private keys, you do not possess control over the cryptocurrency stored in your wallet address.
PayPal was one of the first US-banked financial technology companies to push the idea of digital wallets - now, millions of people, all over the world where PayPal is accepted, couldn't imagine life without a digital wallet, where they store their fiat currency. I am not arguing against the use of software (hot wallets) to temporarily store your cryptocurrency of choice. I'm arguing that the only real way to ensure security of funds is to control them, yourself, with possession of your private keys, in cold storage, offline, not on a mobile phone.
There is a fundamental misunderstanding in how the internet works, by large swaths of the US population, especially among the elderly, you know, octogenarian Congress-critters and spooks in the government responsible for formulating 21st century financial regulatory policies. If you pay attention to what the prevailing message being broadcast by those people is, you would know to expect this.
When the private sector creates a product that helps protect consumer privacy, the powers that be roar into action. It isn't permitted to conduct business online with US Dollars in a non-digital format. Any paper cash transactions take place on a P2P level. Instead of having a third party watching, cash enables a level of financial privacy that is necessary for much of the informal economy to function.
As we saw with the past 2.5 years, there has been an open war on cash and physical currency, reignited using the lock-downs as justification. Instead of facilitating more P2P commerce, which would presumably fill the void left by shutting down every shopping mall and department store in sight (in many states), the war was only intensified. I remember seeing the signs "Please do not use any cash or change, there is a shortage due to the current financial circumstances."
How ironic, the US mints print literally trillions of dollars, and we have coin shortages? Why? Let me shatter an illusion: Because nothing costs less One Dollar. The Dollar Store and Dollar General raised their prices. They're now called The Two-And-A-Half Dollars Store. That's called price inflation, ladies and gentlemen, and it's not going to end any time soon. The Federal Reserve has failed every single time, in its 109-year history, to uphold either of its so-called "Dual Mandate."
The thing is, all fiat currencies go to Zero eventually. There are no exceptions, and there never will be. This is because there will always be people excluded from the larger economy as a whole by gatekeepers, whether financial or legal, doesn't really matter. People are blatantly discriminated against by the existing centralized banking system, and there is no "inclusion" where it matters. Instead of leveling the playing field for ALL Americans and removing barriers to entry for the Middle Class, perhaps the US economy wouldn't be in free-fall as it is right now.
The Middle Class is what built the United States of America that was promoted as the shining example of human achievement following the conclusion of fighting in Europe in 1945. WWII bankrupted everyone in Europe. The US bailed Western Europe out of that economic nightmare with the Marshall Plan. The US Taxpayer paid for the reconstruction of war-destroyed Europe. No one voted on that, it was approved by the US government, not by the people of the United States, who just watched 2 generations of young people fight a second world war in less than 25 years.
World War I didn't just wipe out two generations of the up-and-coming middle class in Europe, but, one could argue, was directly responsible for the ensuing second phase of European war. By dumping all responsibility for war reparations onto bankrupt Germany, the French and British ensured there would be blow-back. We know what happened after that. Wiemar Germany happened, hyperinflation happened, the devaluing of the German Mark happened, and the rise of fascism soon after.
Fast-forward to World War II, and you'll notice similar combatants as the first phase. Most of the same countries all got into entangling alliances among one another, and then spent billions of dollars of taxpayer money, to fight a war against a formerly-wrecked country.
Just think about this: The entirety of Europe was bankrupted by the First World War, that was the justification given by the French for why they wanted Germany to pay for everything. They felt entitled to Germany's money, because, let's face it, the French haven't won a war on their own in hundreds of years. So, jealousy and entitlement to other people's money drove the "Allies'" greed after the Armistice in 1917. The larger European community had the opportunity in 1917 to correct the errors that had been made leading up to the War, instead, they all ganged up on Germany, once again, because Germany was the second largest economy in Europe at the time, behind the Russians. The German economy was on the verge of becoming the most powerful one in the world, and there are certain interests in Europe that do not wish for that to happen.
Keeping people poor prevents them from buying their way into power as the top 1% have made common practice. If the population of a country is wealthy and comfortable, if their domestic economy produces things of value that hold value on the global stage, that country is extremely powerful. Germany has been the industrial powerhouse of Europe for nearly a century, in spite of two massive land wars. Think about this: Germany has maintained its position among the top economies of Europe since it was unified in 1871.
So if a nation-state has a strong domestic economy, well-paid comfortable employees and successful employers who profit, where is the incentive for people to fight among themselves and incite riots and civil unrest? Exactly. Mess around and you might find out you have more in common with the vast majority of people, than you have been led to believe. There are over 7 billion people on the earth at this moment. Governments are minuscule in comparison. You do the math, they're terrified of us, and they know it.
That's why the beast had to be awoken, and we saw it rear its ugly tentacles once again.
Tornado Cash, an open-source software protocol created to mix Ethereum and Ethereum-based assets such as Wrapped-Bitcoin (wBTC), ETH, DAI, US Dollar Coin (USDC), and US Dollar Tether (USDT), to help obfuscate whose coins are whose. As you can assume,this is a way for people, anywhere in the world, to make it harder to track their financial transactions on-chain (to a degree). Anyone who's taken a class on finance or law would know, everything in the system is tracked from person-to-person as the "value" travels through the central banking system.
When you initiate a money transfer within PayPal or Venmo, they operate as the middleman, controlling the money every single second it is kept within the digital wallet assigned to you within their mobile app ecosystem. You do not own the digital wallet within PayPal or Venmo. The same applies to CashApp, because, the wallet is the property of the central entity facilitating the transfer of value across the world.
In the cryptocurrency space, we would call PayPal, Venmo, and CashApp custodial wallets, which are controlled by a third party, but provided "for free" to users. Of course, there are very important distinctions to be made between the legacy digital wallet providers listed above and the cryptocurrency hot wallet space, in general. First and foremost, You need a bank account to move money to and from PayPal, Venmo, and CashApp. While you can obtain a debit/ATM card from all 3, your personally-identifiable information is forever linked to that account. Your legal first and last name, home mailing address, zip code, phone number, and government-issued ID card image.
We call that KYC (Know-Your-Customer), and it is the antithesis to what financial privacy is and should be. Financial privacy implies that the right to transact with other individuals or businesses, is yours to make, and yours, alone. There are no middlemen taking a cut of your business, there are no extortionists waiting, with their bags open, ready for their handout from you. Financial privacy implies that your life, financially, is not available to anyone whom you do not choose to voluntarily engage with.
You would think after more than 30 years of consumer-based development, the internet would have something better to offer the general public than a handful of sites that dominate 90% of web traffic (mostly bots): Facebook.com / Instagram.com, Google.com / YouTube.com, Amazon.com, Twitter.com. These are the gatekeepers. Consenting to using their services equates to handing over all your data, whether you realize it or not, those companies listed above are the largest advertising companies in the world.
I don't need to show you their financial balance sheets to convince you that they dominate the world, because, chances are, you use at least one of them every day. Those gatekeepers, along with PayPal, GoFundMe, Patreon, Twitch, and many other corporations all help contribute to strangling the consumer of any choices in any decision-making process. Oh, you want to send a donation to Canadian TRUCKERS? Use PayPal with GoFundMe? They freeze your bank account. You attached it to the GoFundMe transaction :) That's public. The Canadian banks didn't even have to try to figure out who was providing financial support to the only public protest movement in generations.
The whole Trucker Convoy protest was used as justification for the Canadian government to freeze donors' bank accounts, arrested many and have held them without charge EVER SINCE. If you think you are safe, don't use fiat currencies. Fiat currencies exist because the governments of the world say they do, not because they have any discernible intrinsic value, on their own. This is not to say that the US Dollar doesn't have advantages over everything else; of course they do. The US Dollar, along with Visa and MasterCard, dominate the entire global credit industry. Controlling the major payments rails that direct flows to and from commercial enterprises and individuals is an extremely important role.
VISA and MasterCard take a fee on every single transaction settled on their payments networks, globally. It's a guaranteed profiteering business, so long as people use the fiat currencies that they facilitate the movement and use thereof. While there are Bitcoin Rewards Debit Cards (hello Fold App) and others like Crypto.com, Coinbase, these are all KYC-only. You cannot use a branded debit card or credit card from any card provider without disclosing data, which then is attached to your card account which tracks every transaction you carry out.
Credit cards are a death trap for millions of people in the US every year. The biggest problem isn't even the financial surveillance, it's the sky-high interest rates that they charge cardholders on the debt they carry. These interest rates usually start in double-digits and increase as credit scores decrease.
All this leads to the reality of the situation: Financial privacy isn't possible as long as you participate in their system. There aren't any ways around it, you can't deny the power these institutions have. PayPal claims to have over 300 million users globally. That's not even considering the damage the Chinese tech companies have done regarding data privacy. WeChat and AliPay have close to 1 billion users, nearly the entire Chinese population uses one or the other, if not both, in daily life. They are an integral part of working within the Chinese central banking system. Financial privacy isn't possible while using the Yuan or RMB, you have to exit if you seek any level of control over your own financial destiny.
Financial sovereignty is now a hot-button issue following the Tornado Cash debacle. Just for any readers who aren't aware, Tornado Cash is a cryptocurrency mixer, operating on the Ethereum blockchain to help obfuscate who owns which tokens and what wallets they originated in. Mixers are used by privacy-advocates who want to make it more difficult to be tracked.
There's a fundamental flaw with Tornado Cash, though. It was too easy for the US Office of Foreign Asset Control (OFAC) to seize control over the more than $420M in assets that were stored there. People acted foolishly and arrogantly. Not keeping your cryptocurrency in cold storage (when not in use) is pretty irresponsible, if you're looking to maintain control at all times.
This specifically focused on Ethereum and ERC-20 assets, including but not limited to ETH, DAI, USDC, wBTC and USDT.
The first thing that should concern you is that the addresses for all Ethereum wallets are publicly-viewable, and your personal identity can be connected to the wallet address, using very basic data collection methods that are available to government agencies and private investigators the world-over. Ethereum is not private, at all, that's why more than 55,000 people all over the world, trusted Tornado Cash to safely mix their funds with other people's and allow them to escape theft at the hands of the tax thugs.
Public addresses, especially when involving millions, if not billions of dollars in value transfers, are easy to track by Consensys and MetaMask. Don't use MetaMask. Do not use web browser wallets. Even a mobile hot wallet is a better option than most web browser extensions, which access all your browsing data. MetaMask is one of the largest web browser/mobile wallet browser applications in the world, and for good reason. It was one of the primary facilitators of access to the newer generation of web design (this so-called Web 3.0, which is just a marketing term, in my view). The world's largest NFT marketplace, OpenSea, showcases MetaMask as among the first options for connecting your Ethereum or Polygon Network wallet.
MetaMask is implanted within the browser framework, so everything you do, it sees, and can very easily document your owed taxes based on geo-location and IP addresses. Some would suggest using TOR Browser to obscure your IP address, but, as we saw, Infura, one of the two predominant Web Wallet infrastructure providers, can shut off access to wallets with the flip of a switch.
From a purist viewpoint, MetaMask and Infura are the antithesis to Bitcoin. Centralized gatekeepers deciding who gets access to what wallets and when. That's an invasion of privacy, and it should be taken seriously, considering how much money is made from selling transaction data every day.
People had grown complacent. They watched as the US federal financial regulators dragged their feet for years with the LBRY case launched by the SEC, or the Ripple case, which still doesn't look like it has any end. People thought the feds weren't going to act, and that was their mistake. Always expect your enemy to make the first move, that's why you take necessary precautions.
Don't use public ledgers if at all possible, use hardware wallets wherever you can, rather than installing a plugin wallet to your web browser extension wallets or using a hot software wallet.
Let this be a friendly warning, if you want your financial transactions to be private, don't use Ethereum. Just don't. It isn't going to remain unknown to the IRS for very long. They are hiring 87,000 new agents, and they're arming them, with millions of rounds of ammunition. The IRS is on the verge of the largest crackdown on the middle class in its history. They want a piece of every sale of an NFT you've made, royalties included. They want a piece of every product you've ever sold online for profit.
We are at war, they fired the first salvo, it's time to exit the fiat scam, don't trust the government, they are liars and thieves who exist to personally-profit off the suffering of others (usually the poor and the lower class). We are at the precipice of something truly paradigm-shifting taking place. How much more money is the US government going to steal before people wake up and realize that they aren't to be trusted?
The IRS steals $4 trillion a year in income. That money is used to pay down the interest on the federal Politburo's debt. That debt was NOT incurred by American workers. That debt was NOT incurred by American corporations. The federal government has been expanding out-of-control for generations. It's time to not only reel them in, but let's bring them to heel, by taking away their only weapon against us: money.