Onion Routing

Definition ∞ Onion routing is a technique for anonymous communication over a computer network where messages are encapsulated in multiple layers of encryption. Each layer is decrypted by an intermediate relay node, revealing only the next destination in the circuit. This process obscures the source and destination of the message from any single intermediary node. In digital asset contexts, it can be employed to enhance transaction privacy by obfuscating the origin and destination of cryptocurrency transfers.
Context ∞ Onion routing is frequently mentioned in news related to privacy-enhancing technologies and digital anonymity, particularly in the context of darknet markets or efforts to circumvent surveillance. While offering strong privacy protections, it also faces scrutiny from law enforcement due to its potential for illicit use. Ongoing research aims to improve the efficiency and scalability of onion routing while balancing privacy with regulatory concerns in the evolving digital landscape.