TL;DR
Tor hides your IP address from the server Sparrow talks to, so it can’t link your home connection to your wallet. Sparrow can use its built-in Tor for .onion servers, or route a public server through the Tor Browser.
What Tor does and doesn’t hide
Without Tor, a public Electrum server sees your IP address and every address in your wallet. With Tor it still sees the addresses, but not where you are. If you want the server to see nothing at all, run your own node.
Option 1: an .onion server with Sparrow’s built-in Tor
- In Sparrow, open File → Settings → Server (on macOS: Sparrow → Settings).
- Choose Private Electrum and enter the .onion address and port of a public Electrum server that offers one.
- Leave Use Proxy off. Sparrow starts its own Tor connection for .onion addresses.
- Click Test Connection.
Option 2: a public server through the Tor Browser
- Install the Tor Browser from torproject.org and verify its signature.
- Start it and click Connect. Leave it running.
- In Sparrow’s server settings, pick a public server, switch Use Proxy on and enter
127.0.0.1, port9150. - Click Test Connection.
If it won’t connect
Some networks block Tor. The Tor Browser has a Configure Connection screen with bridges for that. On my own network neither option worked, so I use a public server whose operator says it keeps no logs. I can’t check that, which is why running your own node is the real fix.
Speed
Tor is slower. The first sync of your wallet can take a little longer; day-to-day use is fine.