One trade off that has to be made for the anonymity Tor provides is that it can be considerably slower than a regular direct connection, due to the large amount of traffic re-routing. It keeps a user anonymous by encrypting traffic, sending it through other nodes of the Tor network, and decrypting it at the last node to receive your traffic before forwarding it to the server you specified. Through this process the onion proxy manages networking traffic for end-user anonymity. There are several major pitfalls to watch out for (see: Want Tor to really work?). Warning: Tor by itself is not all you need to maintain your anonymity. SOCKS-aware applications may be pointed at Tor, which then multiplexes the traffic through a Tor virtual circuit. At the same time, the onion proxy software presents a SOCKS interface to its clients. Tor employs cryptography in a layered manner (hence the 'onion' analogy), ensuring perfect forward secrecy between routers.
This software connects out to Tor, periodically negotiating a virtual circuit through the Tor network. Users of the Tor network run an onion proxy on their machine.
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