I was at a Bitcoin Meetup where the speaker said that one of the arguments for smaller blocks was in order to allow onion routing for bitcoin transactions. These connections need to be within the 1MB size.
I don't quite understand what he means. Would somebody mind clarifying?
Not sure how onion routing comes into play in regards to smaller blocks, but the basic rationale for smaller blocks is the following:
1) Smaller blocks mean smaller blockchain means less bandwidth required to sync network state across nodes
2) Less bandwidth required means it's easier to run a full node
3) The more full nodes there are, the better the connectivity between nodes
4) The better the connectivity between nodes, the harder it becomes to isolate or block off parts of the network
5) The harder it is to isolate or block off parts of network, the smaller the risk of government forces intervening
The TOR network itself is rather slow and limited in terms of bandwidth. I guess the speaker was referring to it being easier to run a full Bitcoin node on TOR with smaller blocks, rather than with big ones.
In general onion routing refers to the practice of encrypting network traffic in a way that makes it impossible for a single node to derive origin or destination of a network request. I'm not aware of any hard limits in that regard, but I'm by far no TOR expert. Note that SegWit blocks can reach up to 4MB in practice, so it's probably more a question of "keeping the blocks as small as possible" rather than "keep the blocks at 1MB or less".
