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Originally Posted by Azure
What if I download stuff but don't share it with anyone?
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Depends on the technology being used.
For something like bittorrent, every computer in the "swarm", the group of computers all downloading and sharing the same file, knows about each other, or at the very least knows about the other peers they are connected to in the swarm. When using bt, it shows how many seeders and leechers you are connected to, so each one of those computers knows your IP address and knows what you are downloading (because they have to know where to send and what to send to you).
So all a company has to do is enter into the swarm and record all the IP's they connect to, and they have a nice list of people to hunt down.
Other p2p networks are going to be pretty much the same.
Like BlackEleven said you can install an app which will block known IPs of companies that do this sort of hunting, but of course they're always going to be trying to get new blocks of IPs.
So even if you accept only encrypted connections in bittorrent it doesn't help much. While it does prevent your ISP from knowing what information is being transmitted, it doesn't stop the bittorrent swarm from knowing.
If you use something like usenet, that's different since that's a single point to point transfer from the usenet server to you. You can encrypt that so your ISP can't eavesdrop, and if you trust the usenet provider enough to not divulge your downloading history tracking you would involve a lot more invasive means.
For p2p stuff one could also employ something like TOR, which will do a fairly good job of hiding your IP, or go through proxy services that guarentee your anonynanimity (or so they say).
Without Canada becoming a police state it's pretty easy to stay ahead of things technologically if you really want to, if they created the department for Canadian homeland security and started detaining people for having 80% of their internet usage encrypted that's a different problem.