The term "onion routing" refers to application layers of encryption, nested like the layers of an onion, used to anonymize communication. Traffic flowing down the Tor Network circuit is unwrapped by a symmetric key at each node, which reveals the downstream node.
Each node knows its predecessor and successor but idealy no others. Tor users choose a source-routed path through a set of nodes and negotiate a "virtual circuit" through the onion routed network. The Onion Router (Tor) is a connection-oriented anonymizing communication service.
2 Retroshare 06 Hidden Node Set-Up Quick Overview.
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