DEFINITION of 'Tor'

An open source privacy network that permits users to browse the web anonymously. Tor was initially developed and solely used by the US Navy to censor government communications before the network was made available to the public.

Tor is short for The Onion Router.

BREAKING DOWN 'Tor'

The digital era has disrupted the traditional way of doing things in every sector of the economy by introducing products such as e-commerce, social media, cryptocurrency, cloud computing, and big data. The rapid rise in the development and innovation of digital products has given way to frequent data breaches and cyber thefts. To this effect, consumers are increasingly opting for products that profess data privacy and cybersecurity. Users that engage in digital marketplaces, digital payments, and community forums are demanding more anonymity in the way their online communications and transactions are shared. Data anonymization platforms are meeting these demands in the forms of dark wallets and underground networks. Tor is one of such underground networks that was implemented for the purpose of protecting users’ identities.

The Tor network uses an onion routing technique for transmitting data, hence, the original name, Onion Router. How does Tor work? To operate within the Tor network, a user has to install the Tor browser. Any address or information requested using the browser is transmitted through the Tor network. Normally, each user’s computer that accesses the internet is given an IP address by an internet service provider (ISP). With traditional browsers, when a user requests or enters a domain name (e.g. www.investopedia.com) into the address bar, s/he is requesting the IP address of that domain. The network retrieves an IP address that is paired to that domain name from the DNS (Domain Name System) and sends it back to the user’s IP address once access is authorized. With Tor however, the Tor network intercepts the traffic from your browser and bounces a user’s request off a random number of other users’ IP addresses (computers) before passing the user’s request onto the final destination. The network sends the information to User A’s IP address, which encrypts the information and passes it on to User B’s address, which performs another encryption and passes it on to User C’s address, which is the last address known as the exit node. This last node decrypts the encrypted data and finally relays the request to the final destination (say, www.investopedia.com). This final address thinks the request came from the exit node, and grants access to it. The encryption process across multiple computers repeats itself from the exit node to the original user.

The Tor network obfuscates users’ IP addresses from unwanted surveillance by keeping the users’ requests, communications, transactions, and identities untraceable and private, but not necessarily secure. While there may be some legitimate reasons for wanting one’s data anonymized like to protect top government sensitive information, the use of underground networks also opens the door to illegal activities. The Silk Road site, a notorious underground marketplace known for hosting illegal drug transactions in Bitcoin currency and subsequently shut down by the FBI in 2013, used the Tor network as its host. In 2016, the FBI used complex hacking skills to crack down on owners and users of a Tor-hosted website called Playpen, considered the largest child pornography website.

Tor network is one of the many examples of emerging technologies that attempt to fill a data privacy void in a digital space plagued by cybersecurity concerns. Its open source feature means that its source code is accessible to any user to upgrade or enhance. This in turn means that more advanced versions of anonymized networks are bound to emerge over the years.

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