Definition
Tor (The Onion Router) is a free, open-source anonymity network that conceals who is talking to whom by routing each connection through a chain of three volunteer-operated relays. The client wraps the data in nested layers of encryption — one per relay — so that each hop peels away a single layer, like the skins of an onion, before passing the traffic on. This is why the technique is called onion routing.
The three-relay circuit
A standard Tor circuit uses a guard (entry) relay, a middle relay, and an exit relay. The guard sees the user's real IP address but not the final destination; the exit sees the destination but not the user's IP; the middle relay sees neither endpoint, only the two relays on either side of it. Because no single relay holds both ends of the conversation, an observer must compromise or watch multiple points simultaneously to deanonymize a user — a deliberately high bar that resists casual traffic analysis.
Why it matters for sovereign Bitcoiners
For self-hosters, Tor is a practical building block. A Bitcoin full node can advertise and accept connections over Tor so that the node's home IP address is never exposed to peers, and wallets can broadcast transactions through Tor to break the link between a payment and a residential network. The trade-off is latency: layered encryption and three hops make Tor noticeably slower than a direct connection, and exit relays can see unencrypted traffic, so end-to-end encryption (HTTPS, or an onion service) still matters.
Tor pairs naturally with related tools in this glossary. See Onion Service (.onion) for connections that never leave the Tor network, I2P for an alternative anonymity layer, and Threat Model for deciding when Tor actually fits your risk profile.
In Simple Terms
Tor (The Onion Router) is a free, open-source anonymity network that conceals who is talking to whom by routing each connection through a chain of…