1️⃣ Tor (The Onion Router) is a network that allows you to:
Access the internet anonymously,
Hide your IP address,
Encrypt traffic multiple times (onion routing).
The goal is to protect user privacy, especially when working with cryptocurrency.

2️⃣ Why Tor is used in a wallet

Anonymity

No one can see your real IP, which means it’s impossible to track which device or country you’re connecting from.

Security

Tor hides network traffic, reducing the risk of MITM attacks (data interception on the way to the server).
Access to blocked services
If an ISP or country restricts access to certain blockchain nodes or websites, Tor allows you to connect without limitations.
Transaction privacy
When requesting balances, transaction history, or connecting to RPC servers, your IP is hidden.
This reduces the chance of linking your IP to specific wallet addresses.

3️⃣ How Tor works in a wallet
Tor is usually implemented in wallets as follows:

Enabling Tor mode

Settings include a toggle like “Use Tor” / “Enable Tor”.
Traffic routing
All network requests (balances, transactions, APIs) go through Tor nodes.
The wallet uses a built-in Tor binary or a library (e.g., Tor Android library).
Anonymization
Your IP is hidden,
The wallet’s local node receives data through Tor,
History and RPC requests are not linked to your real device.

4️⃣ Important nuances

Speed: Tor may slow down the connection — usually slightly longer than a normal connection.
Reliability: Some Tor nodes can sometimes be unavailable.
Privacy: Tor protects your IP but not your private keys — they still must be stored securely.

5️⃣ When you should enable Tor in a wallet

If you’re working with crypto on public networks and want to hide your IP.
If you’re in a country that restricts blockchain services.
If you want to increase the anonymity of your transactions.