Swirl Cash is a protocol for non-custodial private transactions on the Binance Smart Chain (BSC). Privacy coins and anonymous transactions are one of the oldest iterations of blockchain technology based on the initial introduction of the technology through the Bitcoin white paper.
Privacy Preserving Transactions on the Blockchain Explained
When Bitcoin was first invented its blockchain was conceived in a way so that all transactions would be public. Anyone who wants to inspect the transactions can do so on Bitcoin’s public ledger. However, it is unknown who controls the wallets that send the transactions. Therefore the network is pseudonymous in nature.
A few years after Bitcoin, Monero was born on the idea to replicate the Bitcoin blockchain but make all transactions private instead. This way no one could observe which amount of cryptocurrency was exchanged and between which addresses the exchange occurred. Another leading privacy coin that followed briefly afterwards is Zcash. However, these two projects represent their own blockchain while Swirl Cash has the goal to add an additional privacy layer on top of the existing Binance Smart Chain.
Smart contract platforms such as Ethereum or the Binance Smart Chain are pseudonymous in nature just as the Bitcoin blockchain. This means that all transactions on the Binance Smart Chain are traceable. It is Swirl Cash’s mission to avoid this public nature of transactions on the Binance Smart Chain through providing anonymity to its users.
Swirl Cash Functionality
Swirl Cash essentially provides a smart contract for which withdrawals are processed through a different address than deposits. After the transaction occurred it is no longer possible for an independent observer to establish a connection between the deposit and the withdrawal.
Swirl Cash uses zero-knowledge proofs in order to maintain the privacy of transactions. Zero-knowledge proofs are a cryptographic method through which one party can prove another party that they know the value of a given variable without disclosing any other information.
A user who wishes to use the Swirl Cash protocol can simply deposit into a Swirl Cash smart contract along with a secret that the user needs to generate and send its hash. This secret is later on required for withdrawing to a different address. Ideally there is some waiting time between deposit and withdrawal in order to further increase privacy.
Swirl Cash in that sense can be best compared to Tornado Cash which is a decentralized protocol for private transactions on Ethereum. Tornado Cash achieves privacy of transactions by obfuscating the on-chain link between source and destination address. The way Swirl Cash operates is very similar to Tornado Cash since Swirl Cash is a fork of Tornado Cash that was customized for the BSC.
Protocols like Tornado Cash on Ethereum and Swirl Cash have the objective to introduce a privacy layer on top of existing blockchains so that users can conduct their transactions without public visibility for the very specific use cases in which the users need to preserve their privacy.
Swirl Cash Protocol Statistics & Token Economics
Currently the Swirl Cash protocol counts with around 500 users and around 4,000 BNB deposited into the protocol’s smart contract. So far the protocol is mostly used for exchanging BNB in a private manner.
The SWIRL token is the network token of the Swirl Cash protocol and was launched in the first quarter of 2021. During the presale 20% of the token supply was offered. It is currently possible to trade the token on PancakeSwap.
It is expected that an airdrop to the protocol users will occur in the second quarter of 2021 allocating 5% of the token supply to its user base. Furthermore, a significant amount of tokens (45%) was allocated towards a liquidity mining program which is open for anyone to participate in. Investors need to provide liquidity for the SWIRL-BNB pair on PancakeSwap and then stake the liquidity tokens on Swirl Cash. Eventually 5% of the token supply is allocated to the team with a one year lock-up period.
SWIRL acts as the governance token of the Swirl Cash protocol. Additionally, protocol fees that are incurred through using the protocol will be used to buy back the SWIRL token and subsequently burn it. On top the protocol plans to implement a tax for sending transactions on the SWIRL protocol which will also be burned. Therefore the SWIRL token can be expected to be deflationary in nature.
Market Analysis
The amount of transactions that are currently anonymously conducted on the Binance Smart Chain are only a small fraction of the amount of total transactions on the BSC. However, Swirl Cash is without doubt the leading protocol serving this particular use case for the Binance Smart Chain. Besides Swirl Cash, BNBmixer is another privacy preserving protocol targeted at the Binance Smart Chain.
The technology applied by Swirl Cash makes it impossible for blockchain analytic companies to trace back the movement of funds and interactions of blockchain addresses which is extremely valuable to the protocol users.
Among the typical users of privacy preserving technologies are certainly enterprises who conduct business over the blockchain and do not wish that their competitors can analyse all their payment streams.
Since it is important for enterprise customers to verify the flow of their funds Swirl Cash provides a cryptographically verified proof of transactional history. An individual or a company who wishes to keep their transactions private is able to show this proof to eligible authorities and proof that their transfers were legit.
Before you go …
Privacy preserving technologies are one of fundamental requirements for a broader adoption of blockchain technology by enterprise users. The built-in compliance functionality of Swirl Cash enables companies to fulfill the requirements of governments to verify their cash flows and at the same time preserve their privacy while conducting business. The deflationary token economics makes the SWIRL token interesting for BSC investors. Swirl Cash is the leading protocol for privacy use cases on the Binance Smart Chain and therefore a fundamental part of the emerging technology stack on the BSC.