Tor helps to reduce the risks of both simple and sophisticated traffic analysis by distributing your transactions over several places on the Internet, so no single point can link you to your destination. The idea is similar to using a twisty, hard-to-follow route in order to throw off somebody who is tailing you — and then periodically erasing your footprints. Instead of taking a direct route from source to destination, data packets on the Tor network take a random pathway through several relays that cover your tracks so no observer at any single point can tell where the data came from or where it’s going.
To create a private network pathway with Tor, the user’s software or client incrementally builds a circuit of encrypted connections through relays on the network. The circuit is extended one hop at a time, and each relay along the way knows only which relay gave it data and which relay it is giving data to. No individual relay ever knows the complete path that a data packet has taken. The client negotiates a separate set of encryption keys for each hop along the circuit to ensure that each hop can’t trace these connections as they pass through.
For efficiency, the Tor software uses the same circuit for connections that happen within the same ten minutes or so. Later requests are given a new circuit, to keep people from linking your earlier actions to the new ones. The entire network is the result of volunteers providing relays. The more people who use it, the better it is at hiding users. Currently, there are a wide variety of users, including average people, the military, journalists, law enforcement, and many others. The Tor project can be installed to Windows, Mac, or Linux machines, using Firefox Aurora. For more information, check out the site- www.torproject.org/index.html.en