An Internet user is often warned by her browser that a web transaction is unencrypted and "could easily be read by a third party". So who's the third party? And how can anyone possibly listen in on traffic that's being transferred over a wired network?
To illustrate one approach, I put together a simple device to silently capture traffic from one end of an Ethernet cable, echo it into a laptop to be recorded or analyzed live, and retransmit it into another cable, unmodified. For as you probably know, Internet traffic will be almost guaranteed to go through Ethernet cables and routers at some point along its path. (Acquiring physical access to network infrastructure is beyond the scope here.)
A straightforward way to echo traffic going in one direction is to use an Ethernet repeater, better known as a hub. They were widely used to build home and enterprise networks still in the late 1990s, but have now been largely obsoleted by switches and similar "smarter" devices.
A hub receives packets in one of its ports and repeats them to all the others, regardless of where they're going. They operate at the lowest OSI layer, the physical layer, which makes them transparent to other devices in the network (save for the speed limitations and data collisions). All this makes them perfect wiretapping devices. Furthermore, this used hub cost me about €3.
Hubs come in handy sizes and look pretty innocent. But they need an external power source, because Ethernet doesn't carry power like USB does. And it's not always easy to quickly find an outlet with your hoodie on and all that. This hub happens to have a 5.0 V low-dropout regulator right after the main fuse, so I just replaced the 7.5 V wall adapter with four AA batteries and it works perfecly.
Disconnecting a cable from a router and rerouting it through our malicious hub only takes around ten seconds, and if done in a relatively low-traffic part of the network, need not even noticeably disrupt connections. This could be done anywhere along the path of the traffic. We could quickly unplug our laptop from the hub if needed without affecting the monitored router; the hub would still continue to redirect the traffic.
If we wanted to be really sneaky, a Raspberry Pi or similar could be used to record the traffic. It could be left recording and we could physically leave the site, perhaps commanding the RasPi to transmit interesting bits over the air. Sadly, I could not test this as I had fried my RasPi during a previous incident.
On this film, an anonymous hacker inflitrates a building and plugs the evil hub into a connection wherewith an innocent user is listening to a podcast. The innocent user is using the gray laptop on the left, and the black one on the right obviously belongs to the eavesdropper. The "router" to be compromised can be seen in the background, between the laptops. Observe how the stream automatically comes back on like it was just a little glitch in the connection.
Never trust the network. Use encryption.