Tor, also known as The Onion Router, bounces your traffic through several random Internet servers, thus hiding the source. It means you can surf a website without them knowing who you are. Your IP address may appear to be coming from Germany when in fact you live in San Francisco. When used correctly, it prevents eavesdropping by law enforcement, the NSA, and so on. It's used by people wanting to hide their actions from prying eyes, from political dissidents, to CIA operatives, to child pornographers.
Recently, Pando (an Internet infotainment site) released a story accusing Tor of being some sort of government conspiracy.
This is nonsense, of course. Pando's tell-all exposé of the conspiracy contains nothing that isn't already widely known. We in the community have long joked about this. We often pretend there is a conspiracy in order to annoy uptight Tor activists like Jacob Appelbaum, but we know there isn't any truth to it. This really annoys me -- how can I troll about Tor's government connections when Pando claims there's actually truth to the conspiracy?
The military and government throws research money around with reckless abandon. That no more means they created Tor than it means they created the Internet back in the 1970s. A lot of that research is pure research, intended to help people. Not everything the military funds is designed to kill people.
There is no single "government". We know, for example, that while some in government paid Jacob Appelbaum's salary, others investigated him for his Wikileaks connections. Different groups are often working at cross purposes -- even within a single department.
A lot of people have ties to the government, including working for the NSA. The NSA isn't some secret police designed to spy on Americans, so a lot of former NSA employees aren't people who want to bust privacy. Instead, most NSA employees are sincere in making the world a better place -- which includes preventing evil governments from spying on dissidents. As Snowden himself says, the NSA is full of honest people doing good work for good reasons. (That they've overstepped their bounds is a problem -- but that doesn't mean they are the devil).
Tor is based on open code and math. It really doesn't matter what conspiracy lies behind it, because we can see the code. It's like BitCoin -- we know there is a secret conspiracy behind it, with the secretive Satoshi Nakamoto owning a billion dollars worth of the coins. But that still doesn't shake our faith in the code and the math.
Dissidents use Tor -- successfully. We know that because the dissidents are still alive. Even if it's a secret conspiracy by the U.S. government, it still does what its supporters want, helping dissidents fight oppressive regimes. In any case, Edward Snowden, who had access to NSA secrets, trusts his own life to Tor.
Tor doesn't work by magic. I mention this because the Pando article lists lots of cases where Tor failed to protect people. The reasons were unlikely to have been flaws in Tor itself, but appear to have been other more natural causes. For example, the Silk Road server configuration proves it was open to the Internet as well as through Tor, a rookie mistake that revealed its location. The perfect concealment system can't work if you sometimes ignore it. It's like blaming the Pill for not preventing pregnancy because you took it only on some days but not others. Thus, for those of us who know technically how things work, none of the cases cited by Pando shake our trust in Tor.
I'm reasonably technical. I've read the Tor spec (though not the code). I play with things like hostile exit nodes. I fully know Tor's history and ties to the government. I find nothing in the Pando article that is credible, and much that is laughable. I suppose I'm guilty of getting trolled by this guy, but seriously, Pando pretends not to be a bunch of trolls, so maybe this deserves a response.