Following the Electronic Frontier Foundation challenge to increase the number of Tor relays, researchers from Yale University Miles Richardson, in collaboration with Mainak Ghosh, Professor Bryan Ford, and Tor community leader Rob Jansen, have announced TorCoin, a new altcoin which relies on the bitcoin protocol.

TorCoin aims to solve the Tor network shortage of nodes problem by allowing the relay node to mine coins which can then be sold on the free market. It uses a proof of bandwidth concept, instead of proof of work. To ensure that actual bandwidth is transferred, it uses a decentralized protocol called TorPath for forming Tor circuits such that each circuit is privately-addressable but publicly verifiable.

The researchers claim that this innovation will incentivize many more users to run a relay node, thus solving the bandwidth problem and strengthening the Tor network by not only maintaining the status quo of anonymity, but by providing better anonymity "because each node on the circuit only knows the IP address of its neighbors [sic], rather than the current situation, where the client knows the IP of every relay on the circuit."

According to Mile Richardson, one of the authors of the whitepaper, the researchers are now working on "developing a prototype, and/or a network simulation to run experiments. " Concerns however have been raised as to whether TorCoin will gain adoption and wider value, whether the network would be sufficiently secure against a Sybil attack or, perhaps more principally, whether bringing monetary incentives into a network founded on principles, such as free speech and anonymity, might counterintuitively disincentivize its use.

Others consider TorCoin a worthy experiment and a novel implementation of the bitcoin protocol to solve the problem of dwindling nodes on the Tor Network as highlighted by the Eelectronic Frontier Foundation. Commenting on TorCoin today an EFF spokesman stated that:

"[EFF] launched the Tor Challenge this week to get more people to support an important anonymity tool that is necessary for activists around the world. With TorCoin, it is encouraging to see people… thinking about how to provide incentives to run Tor relays and nodes."