What Does My Internet Provider See When I’m Downloading Torrents?
Your ISP Sees That You're Using BitTorrent, and Might Throttle Your Connection

In
general, ISPs these days aren't so interested in what you're
downloading. They leave that to the folks being stolen from. Instead,
ISPs are more concerned with how much bandwidth you're sucking up, and
whether that's slowing everyone else down. As such, many ISPs will
throttle your connection—that is, slow it down—if they see you're using
BitTorrent. They don't usually look at what you're downloading (even though they could, if they wanted to), but they will check what kind
of traffic is coming from your machine. That is, they'll see how much
of it is email, web browsing, video chat, online gaming, and so on. If
they see any BitTorrent traffic, they'll slow it down—it doesn't matter
whether you're downloading a legal Linux ISO or Batman Begins. All they
care about is that you're slowing down their network.
To see if your ISP is looking for BitTorrent traffic, check out this list of the worst offenders, or try the previously mentioned Glasnost tool. If your ISP isn't throttling BitTorrent, then you don't have much to worry about, though they still could see anything they wanted.
The Media Companies Sees What You're Downloading (and Will Tell Your ISP)
The
real problem, if you're downloading illegal media, is the company from
whom you're stealing. They (or lawyers or companies on their behalf)
actually go online and seek out torrents of their material, whether it
be movies, music, TV shows, or anything else, and will download the
torrent themselves. From there, they can see a lot of information about
the other users connected—including their IP address. You can even check
this for yourself at home. Start downloading a torrent and click on the
"More Info" section of your torrent client. You'll see the IP address
of everyone you're downloading from and uploading to, plain as day.
Once they find your IP address (which they can do just by clicking "more info" in their torrent client), they'll find out who your ISP is and send them a letter.
Your ISP then, in turn, will forward you a notice that you've been
caught pirating media. Usually the first offense is just a proverbial
slap on the wrist, though if you're a repeat offender it could mean
having your internet service terminated. If you're very unlucky it could
even mean paying a lot of money in a settlement.
These days, the only way to truly keep your downloading anonymous is to take more drastic measures. If you're worried about getting caught downloading illegal materials, use a proxy like BTGuard. It funnels all your BitTorrent traffic through another server, thus keeping your IP address hidden from anyone connecting to your BitTorrent swarm. Even if you're downloading a torrent that's being tracked, they'll see BTGuard's IP, not yours, and BTGuard doesn't keep any logs of their service, meaning they won't trace that IP address back to you.
If you want to keep your traffic from being throttled, you can try enabling encryption in your BitTorrent client. if this doesn't work, BTGuard provides an encryption program along with its proxy service that can hide your traffic better than uTorrent and other clients, to ensure you don't get throttled.
So What Should You Do to Stay Anonymous?
It's a dark time for BitTorrent. A lot of the old methods aren't very useful anymore. Applications like PeerBlock claim to block the MPAA and RIAA from connecting to you, but they're not very reliable, and you can still easily get caught when using PeerBlock. Similarly, while your BitTorrent client's encryption can be helpful against throttling, it doesn't always protect you, since some ISPs use more powerful methods of seeing what you're downloading that can get past basic BitTorrent encryption.These days, the only way to truly keep your downloading anonymous is to take more drastic measures. If you're worried about getting caught downloading illegal materials, use a proxy like BTGuard. It funnels all your BitTorrent traffic through another server, thus keeping your IP address hidden from anyone connecting to your BitTorrent swarm. Even if you're downloading a torrent that's being tracked, they'll see BTGuard's IP, not yours, and BTGuard doesn't keep any logs of their service, meaning they won't trace that IP address back to you.
If you want to keep your traffic from being throttled, you can try enabling encryption in your BitTorrent client. if this doesn't work, BTGuard provides an encryption program along with its proxy service that can hide your traffic better than uTorrent and other clients, to ensure you don't get throttled.
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