Note

On-Chain Privacy Is Not Network Privacy: Node Choice, Tor, and I2P

On-chain privacy is not network privacy. Cryptography can hide who paid whom on the ledger, but whoever first sees your transaction, or your wallet's queries, can link them to your network address unless you route around that.

2026-10-16 · privacy, network-privacy, tor, i2p, full-node, remote-node, bitcoin-core, monero, sovereign-starter, module-2, civil-liberties

Sovereign Starter · Module 2 of 5 · Network privacy

Dark CryptoDecentral hex mesh — a teal origin cell on the left sends two separate winding routes, one teal and one bronze, through a few glowing relay cells to a dim destination on the right, amid scattered faint nodes; no text.

Our privacy notes spend most of their time on what a transaction reveals once it is on a ledger: ring members, full-chain membership proofs, view keys. All of that happens after a transaction reaches the network. Before then, it has to leave your device, and that departure has an IP address attached.

Thesis, stated once: on-chain privacy is not network privacy. Cryptography can hide who paid whom on the ledger, but whoever first sees your transaction, or your wallet's queries, can link them to your network address unless you route around that. Your node choice and your transport decide who that observer is.

Two separate leaks

It helps to split the problem in two.

Leak 1: broadcast origin. When you send a transaction, your node hands it to peers. A well-connected observer that sees it arrive first from one IP address can guess that address created it. Monero's anonymity-network documentation describes its Tor and I2P support as designed "to maximize privacy of the source of a transaction by broadcasting it over an anonymity network."

Leak 2: wallet queries. A wallet has to ask something which outputs belong to it. If that something is a server you don't control, the server learns which addresses or outputs you care about, and from which IP. BIP 157, which defines client-side block filtering for light clients, was written partly because the older Bloom-filter approach offered "zero privacy" to wallets that used it.

Tor and I2P mainly address the first leak and hide your IP for the second. They don't stop a server from learning which addresses you asked about. Only node choice does that.

Node choice comes first

Your own full node. Your wallet asks your node, and your node already has every block. Nobody outside learns which addresses are yours from your queries. This is the baseline every other option is measured against.

A remote node you control. Monero's Moneropedia calls a node on a server you run a "private remote node." The queries still go to hardware you operate, but now they cross the internet, and the hosting provider is part of your threat model.

An open remote node. Convenient, with no sync wait. Moneropedia is direct about the cost: "Node operators can link transactions to IP addresses," and "the Monero community suggests to always run your own node to obtain the maximum privacy possible." Light Bitcoin wallets that query a third-party server have the same structural issue: the operator sees your interest and, unless you hide it, your IP.

None of these is "wrong." Your threat model decides which operator you're prepared to let see what. Write that trade-off down rather than inheriting a default.

What Tor and I2P actually change

The Tor Project puts it plainly: traffic is encrypted in layers and routed through several relays so that "all your local ISP can observe now is that you are communicating with Tor nodes," and servers "just see that they are being contacted by Tor nodes." I2P is a separate overlay network with its own design, built around services hosted inside it.

Both nodes support both networks, but the details matter.

Bitcoin Core (tor.md, i2p.md):

-proxy sends connections through Tor. -onlynet=onion and/or -onlynet=i2p restrict automatic outbound connections to those networks.
DNS can leak. The docs warn that without a proxy for DNS, lookups are made by the operating system, "most likely resulting in them being done over the clearnet to the DNS servers of the internet service provider."
I2P is not Tor. Per the Bitcoin Core docs, "the receiver of an inbound connection sees the address of the initiator. This is unlike the Tor network." With -i2pacceptincoming=0, the node uses a fresh transient I2P address for each outbound connection to make fingerprinting harder.
Bridging has a cost. A node reachable on clearnet and I2P helps the network resist eclipse attacks, but the docs caution that an adversary "may be able to correlate those identities by observing shared runtime characteristics," and recommend against it "if you require unlinkability across those identities."

Monero (monerod):

--tx-proxy tor,... or --tx-proxy i2p,... sends your own transactions out over the anonymity network, while ordinary syncing continues over IPv4.
--proxy sends all external traffic through Tor. The docs list the trade-offs per configuration. Clearnet sync with Tor broadcast reveals "to your ISP that you are running a Monero node". With everything proxied, "Your ISP will see that you are running Tor, but not Monerod."
Syncing purely over hidden services "is not currently supported": monerod relies on IPv4 for sync "to make Sybil attacks more difficult."

The leaks that remain

Monero's documentation is unusually honest about residual risk. It calls its anonymity-network support "still considered experimental," and names specific leaks:

Timestamps. Peer sync messages include the current time. A noticeably wrong clock can help link an onion connection to an IPv4 one. The mitigation is an accurate clock.
Intermittent syncing. Starting a node only to send one transaction and then quitting "can also be used by an ISP to link a user to a transaction."

Two more apply across the board. The privacy of an open remote node reached over Tor still depends on what the wallet asks it. And your IP is only one identifier: reused addresses, publicly posted payment details and timing still link activity no matter how it was transported.

A short self-check

Who answers my wallet's queries, and can they see my IP?
Does my node broadcast my own transactions over Tor or I2P, or over clearnet?
Are DNS lookups proxied too?
Am I deliberately bridging clearnet and an anonymity network, and do I accept the linkability that brings?
Is my clock accurate, and does my node run long enough not to stand out?

What this is not

This is not a setup tutorial, a ranking of wallets, VPNs or node providers, or advice on circumventing any law. Using Tor or I2P is legal in many places and restricted in some; check your own jurisdiction. It makes no claim that any configuration makes you anonymous, and both projects' docs describe known limits. It contains no prices, custody advice or trading content.

The practical takeaway fits on one line: first decide who answers your wallet's questions, then decide how your transactions leave the building. Ledger privacy can't fix either.