What is Tor?

Tor, short for The Onion Router, is an open-source software that enables anonymous communication over the internet. It is designed to protect users' privacy and prevent online tracking by routing internet traffic through a global network of volunteer-run servers, or nodes. This process encrypts the data multiple times and sends it through a series of nodes, effectively obscuring the user's location and activity.

How Does Tor Work?

Tor’s multi-layered encryption is often compared to peeling an onion, hence the name. Here’s a simplification of the three-step process:

• Entry Node: The user's traffic enters the Tor network and is encrypted.
• Relay Nodes: The traffic is routed through several intermediary servers, each decrypting a single layer and forwarding the traffic to the next node.
• Exit Node: The final layer of encryption is removed, and the traffic exits to the public internet.
  Throughout this process, only the entry node knows the user's IP address, while only the exit node sees the traffic’s destination, ensuring anonymity to the user.

How Does Tor Benefit Crypto Users?

• Anonymous Transactions: While blockchains like the one Bitcoin operate on are public and can be traced, using Tor when accessing wallets or blockchain networks adds an extra layer of privacy by hiding the user's IP address and location.
• Access to Private Services: Some privacy-centric cryptocurrencies and decentralized exchanges have .onion sites accessible only through Tor. This ensures secure, private interactions with crypto services that prioritize user anonymity.
• Protection Against Tracking: Tor helps users avoid surveillance by hackers, ISPs, or governments that might monitor cryptocurrency transactions or blockchain activity.

Other Glossary Terms