Tor and Cryptocurrency: Enhancing Privacy in Transactions

Tor is a decentralized network that anonymizes users’ web traffic by encrypting and routing it through a series of repeaters before it reaches its final destination.

What is Tor?

Originally called The Onion Router, Tor is a decentralized network that provides anonymity by encrypting Internet traffic and routing it through a series of servers before it reaches its final destination. The network also uses its own domain ".onion" through which users can provide access to websites and services that can only be accessed through the Tor network. The network is supported by the non-profit Tor Project, which has also released the Tor Browser, an open-source Internet browser that automatically routes traffic through Tor.

The Tor network works by routing each users traffic through three random nodes, or relays, before passing it on to an endpoint. Each leg of the path is independently encrypted, and each relay knows only where the traffic came from immediately before and where it is going immediately after, meaning, by design, no node can ever know the full path of any traffic.

The network is perhaps most widely known for being used as a gateway for dark websites and markets accessible via ".onion" addresses. The most infamous of these marketplaces was the now-closed Silk Road, where users could anonymously purchase illicit goods such as drugs and fake driver’s licenses with Bitcoin (BTC). But Tor is also used by journalists, activists, dissidents, law enforcement, intelligence agencies, and others who need to remain anonymous online for their security.