Tornado Cash teaches: Zcash needs . .

Recent events involving Tornado Cash have prompted us to write down a series of thoughts on paper in an organic way.

For years we have been talking about “privacy” in an abstract way, declaiming the importance of protecting it or hypothesizing what could happen if public or private entities violate the few formal barriers.

And for years we have seen in “decentralization” - combined with “privacy by design” - the light at the end of the tunnel, the one that can illuminate such an important aspect of our life.

In recent days we found out that light at the end of the tunnel is artificial, and can be spent by a switch we have no control.

FACTS

  • Tornado Cash was considered a useful tool for illegal activities, and the addresses connected to it were reported by OFAC.

  • Several services, centralized or not, have banned TC by inhibiting access to its website or the use of its Github profile.

  • Infura, the leading RPC service on which the vast majority of blockchain businesses are based, has disconnected from TC.

  • Circle has frozen the USDC in the wallets of some users who had interacted with the reported addresses, creating a cascade of problems on other connected dapps (MakerDao, DYDX, etc.).

  • An alleged developer of Tornado Cash has been arrested in the Netherlands (link)

All this is due to two fundamental facts: (1) The majority of blockchain activities are based on centralized services, (2) These services are located in the United States, where OFAC can take arbitrary decisions that heavily impact world businesses.

We are aware both ZF and ECC go above & beyond to maintain regulatory clarity, but an event triggering a ban could suddenly happen (or it is already on its way link) .

Infura and Circle have little chance of not applying “sanctions”, otherwise it would have had very serious consequences in the country where they should. But all this must make us reflect on the future of our blockchain, and in our opinion the lines to be explored with absolute urgency are:

A) Create a parallel operational structure, with the same powers as the main one (a society which is a real “mirror” but without the employees) in a country outside the United States and which is not subject to the execution of its decisions, where in case of need operations could migrate in few days. Dubai could be a good location.

B) Create decentralized - or even proprietary - technical structures for both RPC services and related servers, to avoid being crushed by any Infura, AWS or Github bans. This action needs time to be deployed and should be started as soon as possible.

This would not exclude the effort of Zcash in being compliant with international rules against illegal activities, but it would create a “safe zone” in the case of hasty and erroneous decisions of the regulatory bodies to which we are currently subjected.

The funds to create these structures can be taken from the Dev Fund by restructuring the allocations and establishing a share in favor of this initiative.

18 Likes

Having a plan for what to do if a similar event occurs with Zcash can only be a good thing, I have mentioned quite often that one area of weakness (at the moment) is the US centralization. So I’d be interested to hear what others think about this possible threat to continuity.

Reading your post it reads like you have posted this on behalf of a group or collective, you’ve said “have prompted us to write down” and “we are aware” etc. who are you speaking on behalf of in this context?

5 Likes

Thank you for asking!
I use “we” because I write on behalf of the Zcash Italian underground that Zooko met in Zurich before the SNB conference. We are a group of three people administering Zcash Inside profiles on Twitter and Telegram, and we meet regularly to brainstorm about Zcash.

3 Likes

Hello to my fellow European! I remember reading about the Zcash Underground recently.

And I do think that this is an idea worth discussing, how can Zcash increase resiliancy and redundancy…

2 Likes

Just a point of fact that the EF is based in Switzerland and are not under the same legal structure or status as the ZFND or Bootstrap.

2 Likes

I support all the suggestions from the OP. This is a good opportunity to think ahead and take action. If the EF leads this, it will demonstrate growing maturity and it is opportunity to expand capabilities. Unfortunately, the deepest pockets for development of the necessary infrastructure are likely to be the “adversaries” of the U.S., which could have negative consequences for EF participants.

1 Like

Sorry but I am not so good at acronyms, I assume that EF stands for Ethereum Foundation and OP for Original Post.
Thanks @ezaron for supporting this proposal, but what do you mean with “if the EF leads this”, please argument?

Secondly, we think that Switzerland is not a neutral country anymore, and is following all USA/EU political decision in sanctions. That’s why we suggested Dubai which is independent and has some regulation framework for cryptocurrencies and blockchain firms.

lol, yes. sorry about that, meant to say “ZF and ECC”.

Ok great now I get it! And yes I agree.

Ok heres my spiel and then I gotta go do some laundry.

Tax-exempt charity status, once granted and assuming it’s maintained through the doing of what is actually claimed to be the purpose and reporting requirements and so forth, is a right that is codified in law in the US tax code. Take the EFF for example. They have sued the US government (or somebody else on your behalf) and won like almost 100 times now. If the people whomever these lawsuits inconvenience the most could pinch it off at the source, then they would and shut it down. And the right to invoke (counter) legal action is universal but losing lawsuits a-bunch ain’t harassment and any accusations surrounding the charity itself would actually involve suing the IRS on the basis of their original decision to grant status. This decision is a result of a high level assessment that can take upwards of a year over matters that have to be validated beyond a shadow of a doubt and, I’m assuming anyways, coincides with lots of documentation. ToR Foundation is another great example (btw these talks at Zcon were 2 of the best :heart:).
*Personally I believe the continued success of tax-exempt charities is at least partly due to the fact that one of the biggest (if not the single biggest) reasons for the escalation leading up to the American Revolution (the convening of the Continental Congress, voting to dissolve the ruling ties with England and the signing of the Declaration) was taxation without representation through the various, over-half-dozen tax acts imposed by George III in the decade prior. It is foundational to the very meaning of this country and it’s unlawfulness is further mirrored in the 501c architecture.

2 Likes

I have brought up this suggestion before, but we need to see cross private chain swaps.

The best foundation we have for this right now is in the ywallet with zcash and ycash. Where else in any software product are there two shielded coins at your fingertips?

I see shielded coin swaps as an opportunity comparable to the moments when Charlie lee wash traded Ltc against btc, or when uniswap only had 8 tokens listed.

This feature will move the industry toward shielded chains, and once there are a litany of coins to trade all in their unique shielded pools, privacy wins, and inshallah, ZEC may be the base pair.

How difficult would it be to set up a changelly style swap? Quick solution now while more decentralized solution can be worked on.

1 Like

The Cardano funding Catalyst, Fund 9, has a proposal for “Atomic” swaps, drawing a lot of interest. This would be a peer-to-peer chain swap with other chains (no-bridges), and zcash as one of the swappable chains has become of some interest if this Atomic swapping mechanism comes on line. I think these are the same ideas. The swaps would occur inside the wallets, not on a website. I would like to be able to swap some of my ADA over into Z-cash, so I will be voting in favor of this proposal.

1 Like

This is one of the things that scares me most about holding a privacy coin like ZCASH. If the tech starts getting widespread adoption - enough to catch the eye of tax and law-enforcement entities - they’ll just start targeting developers and infrastructure. And now you have the already small group of developers competent enough to create and deploy a tech like this and whittle it down to people also willing to run the gauntlet created by a pissed off American empire.

1 Like

If zcash github is taken down, where would users find the source code? Are we having the Napster moment of blockchain? Similarity’s between decentralized storage (think public vs private trackers) and money are interesting. History may give clues on how it plays out. When everyone is forced to care, the real fun starts, and youll wish you knew where to find all the information you need to stay ahead of big broffer. :performing_arts: Youll also wish you had at least 1 Zcash. :hearts: :owl:

2 Likes