How Is Tor Used for Private Crypto Trading?

The internet isn't private, and when it comes to crypto, KYC requirements can strip away even more anonymity. Enter Tor, a privacy tool that helps users obscure their identity, access blocked platforms, and keep crypto activity off the radar.

What is Tor, and how does it work?

Tor stands for The Onion Router. Yes, like the layers of an onion, except instead of making you cry, it protects your privacy. Tor is a free, open-source software that routes your internet traffic through a random series of volunteer-run servers (called nodes) across the world. The result? Your location, IP address, and activity become very difficult to trace.

In simpler terms: if the regular internet is a straight, well-lit road from your house to the grocery store, Tor is a secret tunnel network dug by privacy-loving moles.

Why standard browsers compromise your privacy

Your standard browser is a bit of a snitch. It reveals your location, what websites you visit, and sometimes what color socks you're wearing (okay, maybe not that last one... yet).

This is especially problematic for people who:

• Live in countries with strict internet censorship

• Are worried about government surveillance

• Just want to browse cat memes in peace

How Tor helps protect your crypto activity

Cryptocurrencies promise freedom and decentralization, but with a catch. Most blockchains are public. That means anyone can see the transaction history of a wallet address. While the address might not be tied directly to your name, it's not exactly Fort Knox-level secrecy either.

This is where Tor steps in again, like a digital invisibility cloak. By routing your wallet traffic through Tor, your IP address, a potential identifier, is hidden from view. This makes it much harder for someone to link a crypto transaction to you personally.

It also adds a layer of privacy when using centralized platforms that enforce KYC rules, helping to disconnect identity from access.

Which crypto wallets and coins use Tor?

Some crypto wallets and platforms are already baked into the Tor network or offer native support. Think Monero and Zcash, privacy-first cryptocurrencies that take anonymity seriously. These projects often advocate for using Tor alongside their own built-in privacy tools, creating a double layer of digital camouflage.

Using Tor to access crypto in censored regions

Not every country is thrilled about crypto. In regions where access to exchanges, crypto education, or DeFi tools is blocked, Tor acts like a secret passageway through the digital Berlin Wall. It helps users reach services that might otherwise be blocked; no passport or bribe required.

This also applies to platforms that require KYC verification, which may be inaccessible or risky to use depending on local regulations. Tor helps users bypass these restrictions and access KYC-gated platforms safely.

Why Tor matters for the decentralized web

It’s not just about coins. Tor is also a champion of the decentralized web, a movement that wants to take power away from centralized tech giants. Many decentralized services host .onion versions of their platforms (only accessible via Tor), ensuring uncensored, private access for anyone, anywhere.

What Tor can't do - know the limits

Before you go full spy mode, a quick reality check: Tor is a tool, not a magic wand. While it greatly enhances privacy, it doesn’t guarantee full anonymity. Leaks can happen. User mistakes can expose you. And yes, simply using Tor might raise eyebrows in some countries.

It's also important to remember that while Tor can obscure your IP, it won’t hide your identity if you're handing it over through KYC forms. Privacy tools can only go so far; staying anonymous means knowing where not to hand over your details in the first place.

Should you use Tor?

Tor isn't just for hackers in hoodies. It's a powerful privacy tool for anyone navigating an increasingly surveilled internet, especially crypto users. Whether you're trading tokens, reading uncensored news, or just want a little digital breathing room, Tor can help you stay one step ahead.

Just remember: with great privacy comes great responsibility.

Can Tor help you avoid crypto tax?

That would be a no. However, or wherever you trade is up to you. But there's no getting around your crypto tax liability. Cryptocurrency is taxed in most countries around the world. Tax authorities like the IRS, HMRC and ATO are watching their tax residents closely, so keep your tax obligations in mind when using Tor or any no-KYC exchange for crypto trading. Koinly is a user-friendly portfolio that helps you track your crypto transactions and calculates your taxable income from crypto. Sign up for free.