Mix network
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Digital mixes (also known as mix networks) were invented by David Chaum in the early 1980s. Digital mixes create hard-to-trace communications by using a chain of proxy servers. Each message is encrypted to each proxy using public key cryptography; the resulting encryption is layered like a Russian doll (except that each "doll" is of the same size) with the message as the innermost layer. Each proxy server strips off its own layer of encryption to reveal where to send the message next. If all but one of the proxy servers are compromised by the tracer, untraceability can still be achieved against some weaker adversaries.
Some anonymous remailers (such as Mixmaster) and onion routing (including Tor) are based on this idea.
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