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This question already has an answer here:

I was reading https://security.stackexchange.com/questions/36571/why-can-a-tor-exit-node-decrypt-data-but-not-the-entry-node and it got me thinking: How does a tor node knows that the next hop is a node and not the final destination?.

In the normal tcp/ip packet you have source address and destination address. How can TOR packets know that they did not reached their destination and it's not only another hop on the chain? Does the packet has any type of TCP options like the TCP/IP packet does?

marked as duplicate by Richard Horrocks, Jens Kubieziel Mar 7 '16 at 19:45

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From the tor protocol whitepaper: https://svn.torproject.org/svn/projects/design-paper/tor-design.pdf

Relay cells. Once Alice has established the circuit (so she shares keys with each OR on the circuit), she can send relay cells. Upon re- ceiving a relay cell, an OR looks up the corresponding circuit, and decrypts the relay header and payload with the session key for that circuit. If the cell is headed away from Alice the OR then checks whether the decrypted cell has a valid digest (as an optimization, the first two bytes of the integrity check are zero, so in most cases we can avoid computing the hash). If valid, it accepts the relay cell and processes it as described below. Otherwise, the OR looks up the circID and OR for the next step in the circuit, replaces the circID as appropriate, and sends the decrypted relay cell to the next OR. (If the OR at the end of the circuit receives an unrecognized relay cell, an error has occurred, and the circuit is torn down.

(Bold emphasis mine.)

I recommend reading the whole section of Relay cells in the linked paper. The idea is that tor packets ("cells") are designed with a hash/signature ("digest") that will only be valid for the data after the last node in your circuit decrypts it. Middle nodes will find that the signature is invalid and know to send it further down the line.

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