Capabilities
The idea of onion routing (OR) is to protect the privacy of the sender and recipient of a message, while also providing protection for message content as it traverses a network.
Onion routing accomplishes this according to the principle of Chaum's mix cascades: messages travel from source to destination via a sequence of proxies ("onion routers"), which re-route messages in an unpredictable path. To prevent an adversary from eavesdropping on message content, messages are encrypted between routers. The advantage of onion routing (and mix cascades in general) is that it is not necessary to trust each cooperating router; if any router is compromised, anonymous communication can still be achieved. This is because each router in an OR network accepts messages, re-encrypts them, and transmits to another onion router. An attacker with the ability to monitor every onion router in a network might be able to trace the path of a message through the network, but an attacker with more limited capabilities will have difficulty even if he or she controls routers on the message's path.
Onion routing does not provide perfect sender or receiver anonymity against all possible eavesdroppers—that is, it is possible for a local eavesdropper to observe that an individual has sent or received a message. It does provide for a strong degree of unlinkability, the notion that an eavesdropper cannot easily determine both the sender and receiver of a given message. Even within these confines, onion routing does not provide any guarantee of privacy; rather, it provides a continuum in which the degree of privacy is generally a function of the number of participating routers versus the number of compromised or malicious routers.
Read more about this topic: Onion Routing
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