Sanctions imposed on Iran have not altered the continued use of a new virtual currency that made headlines when it was first introduced in late 2014, according to an article written by a researcher at the University of Melbourne. In November 2014, Iran’s central bank banned banks from dealing with two digital currencies-Tornado Cash and DigiCash-and has since cracked down on Bitcoin trading. Many Iranian traders who were purchasing Bitcoins for hard currency were forced to use the new virtual currencies due to sanctions against Bitcoin transactions.
But according to the study, many Iranians continue trading via these methods as well because they are more profitable than domestic alternatives. Sanctions have not affected the use of Tornado Cash by traders, according to Sergio Demian Lerner, who wrote an article in which he describes his findings. Lerner is a computer programmer, a cryptocurrency consultant, and the founder of Argentina-based RootStock. Lerner’s study examined the network’s transactions for two months, from 19th January to 8th March 2016. Lerner says that the popularity of Tornado Cash has given rise to an economy in which dollars and gold are replaced by the new currency.
What is Tornado Cash and why was it Sanctioned?
Tornado cash was not the first cryptocurrency sanctioned by Iran’s government. The new digital currency was largely inspired by the success of Bitcoin. It was created by Mohammad Reza Nourbakhsh, a computer science professor at the University of Maryland. He wanted to create a new type of cryptocurrency that would work just like Bitcoin but with some minor tweaks. But he never released it, and instead opted to never make it available for purchase. The name “Tornado” derives from Nourbakhsh’s effort to make the currency as difficult to mine as possible and thus make it more valuable.
Crypto news update Friday — Tornado Cash developer detained, Core Scientific cuts jobs, and BlackRock’s bitcoin bet | CNBC video at https://t.co/jo32nwcQM3#crypto #Tornado #corescientific #blackrock #bitcoin pic.twitter.com/qGWlNsTTwI
— The Biz Coach (Tips) (@bizcoachcorbell) August 12, 2022
Tornado Cash is a mixer, a protocol that pools funds and then redistributes them to obfuscate the origin of a transaction. Officials have now blacklisted the privacy solution, alleging it has been used for widescale money laundering, scams, hacks, and other cybercrime. TORN is the governance token of Tornado Cash and its price plummeting reflects general investor confidence after news of the sanctions broke.
Tornado Cash Price Prediction
The sanctions imposed on Iran have not affected the use of the new virtual currency. Experts say that the digital currency’s value will continue to rise as long as international sanctions continue to hold Iran back. It is a new way for Iranians to trade without having to deal with international restrictions. Although Lerner’s study has revealed that the sanctions have had little effect on the popularity of the currency, that does not mean it does not have any other impact. For example, Iran’s central bank has also banned banks from dealing with cryptocurrency exchanges. And international sanctions can affect Bitcoin trading and thus Tornado Cash as well. Iran’s central bank was surprised when it discovered Bitcoins were being transacted in the country, and it did not expect to be taking in so much hard currency via Bitcoin transactions.
Reasons to be Bullish on Tornado Cash
The research shows that some traders are not operating on the heels of sanctions yet. There are no signs that will happen anytime soon. The researcher’s findings show there is a significant trend toward the use of Tornado Cash in Iran. This could have been due to payment restrictions imposed by banks or other institutions rather than any sanctions against transactions involving this digital currency. He also makes a point to say that there are no indications as to why Bitcoin trading was affected, but it was an accident or due to a mistake as opposed to an intentional move by the central bank.
