How do TorCoins work? The tor network relies on volunteers providing bandwidth. This is a limiting factor of that system, since there is currently no direct benefit by operating a tor relay.

As I understood, TorCoins are altcoins that can be mined by providing bandwidth to the system. But how would a Proof-of-Work mechanism work for such a system?
TorCoin
is an alternative cryptocurrency, or altcoin, based on the Bitcoin
protocol [8]. Unlike Bitcoin, its proof-of-work scheme is based on bandwidth
rather than computation. To \mine" a TorCoin, a relay transfers bandwidth
over the Tor network. Since relays can sell TorCoin on any existing altcoin
exchange, TorCoin e ectively compensates them for contributing bandwidth
to the network, and does not require clients to pay for access to it.

For more info, see the white paper on TorCoin.