Cryptocurrency has grown to be a globally recognized system that facilitates free and borderless trade, has no central authority, and provides enhanced consumer privacy.
Thanks to the Tor software and network, the cryptocurrency community has grown tremendously in recent years.
Tor is a software that allows users to use the internet anonymously through a discreet and encrypted network.
When connecting to this network, a user’s internet traffic is routed through a number of global servers, each of which removes the information of the previous server to the extent that the last exit node server ends up being clueless as to where the network originated from.
Today, consumers can comfortably shop over the internet using cryptocurrency with the currency trail being virtually untraceable – that is what Tor can facilitate in the economic realm.
Most people who use cryptocurrency, such as the predominant Bitcoin, are often advised to perform their transactions through the Tor network.
This is a focal point in providing transaction anonymity.
Moving forward, there are several ways that using Tor with cryptocurrency transactions can benefit the consumer.
Privacy in Cryptocurrency Transactions
If cryptocurrency transactions were to be carried without Tor, it would be easier for analysts to match one’s transactions and keep track of the money trail.
Considering the fact that consumers were looking for anonymity while carrying out transactions in the first place, not using Tor would largely defeat the purpose of using a cryptocurrency – aside from currency valuation, that is.
With the user routing their activities through Tor, the receiving end of the transaction and any watchful parties won’t be able to link the transactions made to their original IP address.
Moreover, it is interesting to note that cryptocurrencies other than Bitcoin (such as Dash or Zcash) that provide cryptocurrency anonymity as one of their main security features will still gain advantage from Tor to obscure the networking part of its transaction.
In other words, just because the currency isn’t traceable doesn’t mean that your IP address and transaction cannot be traced if you don’t take the proper steps to conceal it.
Secures the Cryptocurrency Networks
Bitcoin itself makes use of Tor to increase its security in addition to its users having secure transactions.
The core Bitcoin project integrated Tor’s onion service to their core network daemon.
With Tor running in the core system (starting with Tor version 0.2.7.1), Bitcoin will create a hidden service and end up adding another Bitcoin node over Tor to prevent the true IP address of the node from leaking if Tor is running.
In addition to concealing the user’s activities, this integration also helped to provide a greater network protection against targeted attacks to nodes.
There are thousands of Tor nodes for Bitcoins, and you will also find that other cryptocurrencies also followed suit with an identical pattern.
Given the fact that cryptocurrency networks continue to be prime targets to many hackers, mining pools are increasingly advertising Tor support for their miners.
For miners, having anonymity is an indispensable security.
There are a number of Bitcoin-related sites and services advertise that support Tor and related services.
Likewise, many of these sites have onion sites in addition to their Clearnet sites.As cryptocurrency continues to gain ground, secure network browsing tools such as Tor will proportionately increase in value and importance.