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In the movies, it's not uncommon to see the digitized global map projected on a huge wall with a line of light (presumably a user's connection) travelling back and forth all over the globe in a confusing web. Supposedly this is because he is using dozens of proxy servers all around the globe to mask his connection.

First of all, is this even actually possible (without essentially freezing or timing out every request)? I've run applications through several proxies at a time (three or four maximum), and even this seems to slow performance to a relative crawl. If these proxy servers were a large distance apart physically as well (one in Germany, one in China, one in Australia, etc.) it seems like that would generate an even bigger performance hit and make this approach unrealistic. I'm not an expert in client-server traffic, though, so I may be misunderstanding something or ignorant of a technique that makes this possible.

Secondly, even if a malicious user could do this, is it useful? Does it actually cloak his tracks, or is it merely security through obfuscation? It seems like no matter how many servers you run your connection through, that digital footprint will still be there and it will still be traceable.

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There is an unavoidable minimal latency when shooting packets across the whole planet, because the speed of light is an absolute maximum for the transfer of controlled information, according to the Laws of Physics as we know them.

("Controlled" means that I am not talking about so-called quantum teleportation, which works in lab conditions, but does not let you choose the information that you send. Also, even if the laws of physics can be broken in abstracto, it is doubtful that existing routers and, even more so, infected PC, will be so kind as to enact the break for you.)

Thus, the minimal time for a roundtrip between North America (East Coast) and Europe is about 40 ms (20 ms for each direction). In practice, observed roundtrips are close to 120 ms (that's what I personally get, ping time from my home in North America to my server in France), which is bigger but still in the same order of magnitude. Assuming this crude measure to be representative, we may then claim that the latency will be about three times what it would take for light (in a vacuum) to walk the total distance. This leaves us enough juice to do more than two circles around the world (even equatorial circles) and still be at sub-second latencies. One second of latency is not comfortable and you certainly do not want that for any gaming-related activity, but it will be far from timeouting.

This can be compared with Internet access through geostationary satellites: since such a satellite orbits at 36000 km above the Earth, ping time is always bigger than half a second (that's four 36000 km trips for each ping). Such latency can be heard when phoning people in remote places (where there is no transoceanic cable): the extra latency always gives the impression that the guy at the other end is not fully awake. I certainly would not like a satellite-based Internet access for my own usages, but there are people who succeed at it.

As for security, each hop is indeed a good way to cover your tracks, as long as the proxies do not propagate the information. Normal proxies add their own HTTP header line to make it clear from whence the request originally came; an anonymizing proxy will omit that header. When proxies are all over the World, it becomes complex for Law Enforcement Agencies to rewind the whole cascade, because they have to seize each successive proxy and find log entries which point to the next (previous) proxy machine. International police being what it is, competent attackers who do a lot of hops consistently evade legal retaliation (but competence is a rare thing in this World).

Of course, the Hollywood World Map with lights showing the whole path is a pure fantasy; and even if it existed, it would indicate a spectacular failure for the attacker: the whole point of doing many hops is to make it difficult to rebuild the complete sequence of proxies, regardless of whether the rebuilding is for feeding a World Map with blinking lights, or to unleash a police squad on the perpetrator.

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Great answer, I would just add that a nice rule of thumb (amongst black hats) is to mix as many conflicting jurisdictions as possible, and make sure you have a few hops through countries that don't play well with the victim's host/isp country. –  lynks Dec 4 '12 at 20:39
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A little more detail for you that might be useful to the question. Proxies aren't the only thing that does relays. Your information doesn't actually travel directly from your computer to the server you talk to. This is why things like SSL are so important. Rather your computer talks to a device called a router or gateway at your ISP and then your ISP routes the traffic across their network and then at the edge of their network it either goes to their carrier or the internet backbone (which is itself primarily made up of a bunch of really really big "ISPs" that have agreed to allow connections across their network. Then the process is reversed once it gets to the ISP of the server you are trying to reach until it eventually gets to the server. You can see this path if you do a trace route on your computer for a particular server.

Anonymizing proxies and more commonly bot-nets, make it even more complicated because the routing stops off at a bunch of different computers, potentially around the world, and avoids logging information about where the traffic came from. This complicates the process of figuring out where a connection came from though if the ISP that they communicated with keeps records, it can sometimes be possible to look at when traffic came in and left to get a guess about the missing information, but it's hardly an instant or guaranteed thing if the attacker is being careful. It takes time and subpoenas and hoping that foreign jurisdictions are in a good mood that day.

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