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What Are Mixnets? A Look At Improving Privacy In Web3

6 mins
Updated by Artyom Gladkov
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You may have heard of VPNs or even the Tor browser as ways to protect your data online and as you browse the web. But crypto and web3 need more than this. Fortunately, a more powerful and complete solution to online privacy exists — the mixnet.

Before understanding what mixnets are or how they work, let’s look at why these privacy-preserving solutions are necessary in the first place. Here’s why our data, particularly IP addresses, are so exposed. 

How the internet routes data

mixnets cover

Sending data across a network is analogous to sending letters. For the postal service to know where to deliver a letter: it needs to have a correctly formatted address on the envelope. Similarly, for you to communicate with a website, device, or server, you need to send your data to its IP address. In turn, it will send data to yours.

So this is the heart of the problem. We don’t want to expose our identity and other data. However, we need to reveal something in order for communication to happen. We’ve relied on the same system for the past forty years: IP addresses.

The IP address is an individual’s digital mailbox online. Unfortunately, this digital mailbox is often very easily linked to your real-life identity through your online activity. It can then be exploited and used to harvest data about the individual without their consent. 

A simple solution: the VPN

A very simple workaround is to add an intermediary who sends the data on your behalf and receives the data before routing it back to you. Now the website you are using doesn’t see your IP address but that of your Virtual Private Network (VPN).

Unfortunately, this approach has drawbacks. You are now trusting the VPN with your IP address and data. The VPN provider can see your IP address, what services and websites you use, and when. VPNs don’t solve the problem, instead shifting the party you have to trust from the services you interact with to the VPN you use. This is still far from ideal, especially when many VPNs have opaque business models that suggest they may be doing more with your data than just protecting it.

On top of this, a single intermediary is very easy to correlate with the sender, e.g., your VPN oftentimes very quickly just becomes synonymous with your IP address. This makes it useless after a short period of time.

The Tor browser: onion routing & multiple intermediaries

The Tor browser, often considered a gateway to the dark web, routes your data through multiple intermediaries. Returning to the analogy of sending a letter, your letter (the data) would be packaged within multiple envelopes instead of using a single envelope. Each envelope has the address of the next person on the relay.

So you would send the letter to the first intermediary. They would remove the first envelope to reveal the second envelope. This would contain the address that the letter must be passed to next.

The next person would do the same until the final letter reaches its destination. This way, no one knows where the letter originated or where it is going. They only see who sent them the letter and who they have to send it to next. This is referred to as onion routing, as it is similar to the layers of an onion. 

TOR onion layers
Tor browser onion layers: HOPR

Limitations of Tor

Onion routing is a more complete solution to the problem and conceptually the right approach. However, it is still vulnerable on its own. Although the intermediaries can’t see who sent the data, an observer of the network can observe the activity and movement of data across the network to perform correlation and timing analysis. To truly complete the solution, you must include some protection for metadata leaked to network observers.

Completing the solution: what is a mixnet?

A mixnet complicates the metadata leaked on a network. Each message is split into multiple data packets, which are routed individually across the network and then reconstructed at the final location. This complicates the flow of data between the sender and receiver and reduces the amount of data a malicious intermediary can access.

Data complicated via mixnet: HOPR
Data complicated via mixnet: HOPR

Secondly, the data packets are mixed by every individual node across the network. With packet splitting, there is much more traffic moving across the network. So, every node will have multiple packets to process from many different sources, which is leveraged to complicate traffic analysis further.

Nodes add a randomized delay to each individual packet they process and send them out as a bundle to the next node on the route. Each node receives a bundle which it separates, jumbles, delays, and re-bundles before passing onto the next node.

Mixnets: a complete yet unused solution

Similar to email, the concept of the mixnet existed before even the internet. But only in recent years, with the rise of web3, has it been given any attention as a useable solution. The problem is you need many intermediary nodes to run a mixnet and provide the privacy users deserve when browsing the web. But expecting people to do this from the goodness of their hearts without compensation is the same thinking which has led the Tor project to stagnate and never reach the mainstream.

With blockchain and cryptography-based incentives, this changed as a mixnet can now pay its node runners in a truly decentralized way. This opens an avenue for these protocols to finally have a chance of becoming mainstream and revolutionizing data privacy for good. 

Frequently asked questions

Why are mixnets not more common?

Can intermediary nodes see my data in a mixnet?

Can a mixnet be compromised?

About the author

HOPR founder

Sebastian Bürgel builds technical solutions that empower the individual. As founder of the private data exchange infrastructure HOPR, he contributes to establishing full stack privacy for web3. He also co-founded two other technology startups: Validity Labs (blockchain education & services) and Sonect (fintech). Sebastian holds a Ph.D degree in Microtechnology from the Swiss Federal Institute of Technology, ETH Zurich.

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Sebastian Bürgel , Founder at HOPR
Sebastian Bürgel is the founder of HOPR. Bürgel builds technical solutions that empower the individual. As founder of the private data exchange infrastructure HOPR, he contributes to establishing full stack privacy for the web3. He also co-founded two other technology startups: Validity Labs (blockchain education & services) and Sonect (fintech). Sebastian holds a Ph.D. degree in Microtechnology from the Swiss Federal Institute of Technology, ETH Zurich.
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