Torcoin: New Altcoin Hopes To Incentivize People Into Running Tor Relays

4 minute read

Posted by: Doug Roberts </a></span> June 18, 2014

We all know how horribly slow the Tor network can be, and the reason for this is largely due to the lack of people running active relay nodes, which is currently done on a volunteer basis.

Outside of a desire to contribute to improved functioning and security of one of the best anonymity tools in existence, there isn’t much of an incentive for people to run Tor relays.

The problem many have been working on is how to compensate relay operators while retaining anonymity of those using Tor. And the solution may finally come from a new alternative digital currency that hopes to incentivize people into running Tor exit relays.

TorCoin was announced in response to the Electronic Frontier Foundation’s Tor challenge, which is an effort to increase the number of Tor relay nodes, and operates on the Bitcoin protocol. But instead of generating coins through proof of computation power as done with Bitcoin, TorCoins are generated based on how much bandwidth a Tor relay provides, which is referred to as “proof of bandwidth.”

The white paper details how the amount of bandwidth provided by each relay will be measured through a program called TorPath, which is paired with TorCoin. TorPath is a “secure bandwidth measurement mechanism that utilizes decentralized groups of ‘Assigntment Servers,’ extending Tor’s existing ‘Directory Servers,’ to assign each client a Tor circuit that is publicly verifiable, but privately addressable.”

TorPath then “signs” freshly minted TorCoins, which anyone can verify by checking the blockchain.

If TorCoin generates enough interest, relay operators will be able to sell their mined coins for other forms of currency in an altcoin exchange.

Development is being conducted by Yale researchers Mainak Ghosh, Miles Richardson, and Bryan Ford along with Rob Jansen from the U.S. Naval Research Laboratory.

Of course every novel technology is likely to have potential security flaws, and the developers of TorCoin outlined a few they are concerned about.

The most important issue when using Tor is remaining anonymous, and it’s one of the biggest concerns that the developers of the TorCoin and TorPath protocols have as well. Developers claim that the TorPath protocol guarantees “that no single relay knows any client’s entire circuit.” However, if clients or relays decide to collude, the developers admit that “they may be able to shrink the anonymity set to the set of honest relays and clients in the consensus group.”

Groups can have varying sizes, however, allowing clients to choose a desired balance between anonymity threshold and circuit assignment delay

Reads the white paper.

And providing that not “too many” participants in each group collude, the TorPath “random circuit selection mechanisms prevents colluding clients and relays from deterministically placing themselves in the same circuit.”

Our goal for this paper is to maintain at least the status-quo of anonymity in the Tor network. Currently, every Tor client uses a trusted group of ~7 “directory servers

To assign them to a circuit. Our implementation relies analogously on trusted “assignment servers” to assign clients to circuits. That’s the purpose of the TorPath assignment protocol,” said Richardson.

In fact, it provides better anonymity than the status-quo, because each node on the circuit only knows the IP address of its neighbors, rather than the current situation, where the client knows the IP of every relay on the circuit. So yes, this assignment protocol relies on trusted servers. But so does Tor in its current state.

Richardson admits that the team hasn’t fully considered some issues such as massive botnet forgery, but said they will be further addressed in future versions of the paper.

“The next step is developing a prototype, and/or a network simulation to run experiments,” said Richardson.

Others have voiced more general concerns such as whether it’s a good idea to use monetary compensation to increase Tor relays, citing the research paper “A Fine is a Price,” as an example of how it might worsen the situation.

Another open question for discussion — and according to Richardson, one of the most important questions — is: what will give TorCoin its value? Other than people who want to donate to Tor relays, who will purchase the coins, and will the altcoin generate enough interest to actually support trading?

What reason do people have to buy Dogecoin? Not much, beyond using it as a currency or speculating with it as an investment. I could see TorCoin working the same way

Said Richardson:

It’s a great idea on paper, and offering incentives to relay operators seems like a reasonable solution to the lack of Tor relays. It really comes down to whether the technology can withstand collusion while retaining anonymity, attract enough participation, and maintain a high enough value to successfully be exchanged for alternative currencies – questions that can truly be tested only in a live environment.

Updated: 2014-06-18