What’s the Difference Between a Proxy and a VPN

In many ways, proxies and VPNs are similar. They both re-route traffic through a remote computer. Both can help keep you anonymous by hiding your IP address. And both can be used to get around geo-blocked content.

But they also differ in a few significant ways, especially when it comes to security and the level of privacy. Depending on what your goal is, these differences between a proxy and a VPN can flat out eliminate one as a better option (or an option at all) over the other.

What Is a VPN

A VPN (which stands for Virtual Private Network) is made up of one or more servers run by a VPN company. You connect to one of these VPN servers using locally installed client software supplied by the provider. Once connected, the server acts as a middleman for all traffic between your device and the Internet.

The tunnel (connection) between your device and the VPN server is highly encrypted. Anyone intercepting your traffic (like your ISP, the government or a hacker) as it travels up or down that tunnel will be unable to decode it and view its contents.

Before your traffic exits the tunnel at the VPN server end and heads towards its ultimate destination (ex: a website you're viewing), your IP address and other information which can identify you are stripped out. Equivalents from the server take their place.

Diagram of how a VPN works compared to proxies

Beyond this point, anyone who receives your traffic will believe it's coming from the VPN server, not your device. They will also think your location is that of the VPN server. Your real identity and actual physical location remain private.

VPNs work at the operating system level. Once your device has connected to a VPN server, by default all network traffic goes through it. Using everything from your browser to purpose-specific software (for example streaming or downloading clients or apps) remains secure and anonymous.

As an optional advanced setting, many providers will give you the flexibility to exclude traffic from specific software or ports if you wish to do so. I for example like to exclude my music streaming app since a bunch of the music I listen to is not always available in countries I VPN to.

What Is a Proxy

Conceptually similar to a VPN, a proxy is a single server which also acts as a middleman for your Internet traffic. Proxy setup comes in one of two flavors. You can configure it manually at the operating system level, the more complex option. Or, as done typically, you can set the proxy up for each application with which you want to use it. A lot of software supports the use of proxies, including all major browsers.

Software which uses a proxy to talk to a website or another resource on the Internet relays traffic through the proxy server with which you configure it. Unlike a VPN, there is no encryption applied to the connection between your device and the proxy server.

Diagram of how proxies work compared to VPNs

When your traffic reaches the proxy server, your IP address gets stripped away. However, a lot of the other information which may identify you may remain. But, from an IP point of view, from there onward, everyone will believe they're talking to the proxy server, not to you. Your location will effectively be masked, replaced by that of the proxy.

As mentioned above, proxies are usually set up at the application level, on a case-by-case basis. Proxies on browsers are quite easy to configure, as are VoIP applications (Skype, etc...) and BitTorrent clients. Anything else is hit or miss. If you want to redirect all your Internet traffic through the proxy, your best move is to set it up through the operating system.

When to Use a VPN

A VPN is an excellent tool for anyone who wants to maximize their online privacy and anonymity, get around Internet censorship or access geo-blocked content. I use one daily for any and all of the above reasons.

Connecting to a VPN gives you a new IP address. And, unlike when using a proxy, any data you send or receive is encrypted. It's the combination of those two features which makes VPNs such an excellent tool.

  • Maximizing Online Privacy

    After your device connects to a VPN server, all data transferred between the two is highly encrypted. Anyone from your ISP to a hacker (or the government for that matter) is unable to read what you upload or download. They also can't tell which website or resource you're using, since everything goes to the VPN server first.

    At the opposite end of the connection, the website or service you're accessing also has no idea who you are (unless you let it know by logging in). For all it knows, you're the VPN server.

  • Bypassing Geo-Blocking

    VPN provider servers are spread out all over the globe. Some services, like PureVPN or HideMyAss! support well over a hundred countries. If a piece of content you wish to access is restricted to a specific geographical location, connecting to a VPN server there will unblock it. The IP of the server you connect to will be local and hence allowed. This, for example, is how I access US Netflix when abroad.

  • Bypass Censorship

    Similarly to how it lets you get around geo-blocking, a VPN can bypass censorship. If your current location does not allow viewing certain content or accessing an online resource, using a VPN server in a country which does will side-step those restrictions. Connecting to servers in countries like Estonia, Iceland or the Netherlands is typically a good choice for this purpose.

  • Preventing Bandwidth Throttling

    Based on what you're currently doing online, your internet service providers may reduce (throttle) your bandwidth speed. This practice is very common when torrenting (for which there are many legitimate uses).

    By analyzing the type of data you're receiving, the ISP may slow down your connection to levels which can be multiple times lower than what you're paying for. Because a VPN encrypts data going to your device, it prevents your ISP from figuring out what you're doing. If they don't know, they can't throttle your bandwidth.

  • Wi-Fi Hotspot Security

    Anytime you use a public Wi-Fi at a coffee shop, hotel or airport, you're opening yourself up for potential security breaches. With a few tools, it's surprisingly easy for someone who's on the same network to start intercepting your data.

    Using a VPN won't prevent them from doing that. But, because your data will be encrypted, whoever grabs it will not be able to view or do anything with it.

  • VoIP Privacy and Security

    Voice over IP calls are also relatively easy to listen in on. They travel the Internet unencrypted. It does take a bit of technical know how, but even mid-level hackers (for the lack of a better term) may be able to eavesdrop on conversations.

    If you regularly use Skype, Viber or any other VoIP service, connect to a VPN before making a call. The encryption that comes with it will make hacking attempts impossible, keeping your call private and secure.

  • Preventing Search Engine Query Logging

    With the intent of serving you better by delivering more accurate results and ads, search engines tag all searches with the IP address which made them. By knowing your past, they can better predict what you want in the future.

    The downside is the Google's and Bing's of the world are effectively cataloging your life. Are you looking for a divorce lawyer or information on anti-depressants? They know it and log it. We all likely have parts of our lives we prefer to keep private. By using a VPN to hide your real IP address, your searches will remain anonymous.

Issues With Using a VPN

There is no such thing as a free lunch, and there are a few downsides to using VPNs. Though, at least in my opinion, they are all relatively minor.

A VPN requires you to download and install a client. That's yet another piece of software you need to put on your device. Every provider has their own version. And they all look and work differently too. So, if you ever switch providers (or use multiple ones as I do), you'll need to install and learn a brand new application every time.

Different VPN provider software installations

Using a VPN may also slow down your connection. By how much and if at all depends on many factors. It starts with the encryption applied to everything you send and receive. Encrypting and decrypting takes processing power. If your device cannot to do so quickly enough, data will be delayed, and your connection speed reduced to where it can keep up. Thankfully, you can usually get around this issue by reducing the level of encryption, which most providers let you do.

Anything you send over a VPN also needs to travel an extra distance to the VPN server. That distance, combined with the current server load, may also affect speeds. To alleviate this problem, choose a lightly loaded server as physically close as possible to you or the content you're viewing.

One more potential sticking point with VPNs is activity logging. For maximum privacy, you should ensure you use a completely logless VPN provider. Some services may keep anonymous data like connection timestamps or transferred data totals, mostly for network performance and troubleshooting reasons. On its own, that data can't identify you, but it is still a footprint. If you want to be extra careful, any provider off my list of best VPNs for privacy makes the cut.

When to Use a Proxy

There are several things for which proxies are very useful. They're not as versatile as VPNs but are a good lightweight option for low-stake tasks where security and privacy are not of great concern.

  • Some Online Privacy

    Proxies can give you some degree of privacy, though nowhere close to what a VPN can do. All data goes through the proxy server, so your ISP won't know the IP address of the website or service you're accessing. Unfortunately, because proxies don't use encryption, the ISP can still see and identify the contents of what you're viewing or downloading.

    On the other end, however, the website or service you're accessing will have no idea it's talking to you (unless you log in). It'll think it's communicating with the proxy server. So at least from that side, using a proxy can keep your real identity hidden.

  • Bypassing Geo-Blocking

    Like a VPN, proxies give you a new IP, that of the proxy server you use. Choosing a proxy in a country which allows viewing the blocked content you're trying to access should let you see it too.

  • Bypass Censorship

    Proxies are also useful in getting around online censorship. If, for whatever reason, you're not allowed to view specific content at your current location, pick a proxy in a country which does.

    There is one caveat to using proxies instead of VPNs for this purpose. It again goes back to the lack of encryption. With proxies, data leaves and arrives at your device unencrypted. If you're concerned about someone snooping around to see what you're doing, a VPN will stop them in their tracks and give you complete security and privacy. A proxy will not.

  • Preventing Search Engine Query Logging

    Every time you use a search engine, it records your query with your IP address firmly attached. Google, Bing, Yahoo, they all do it. This type of logging helps tailor future searches to your history and gives you better results and more relevant ads.

    The downside is the search engines know and remember everything you look for. And some of those things we may prefer to keep private. By hiding your IP address with a proxy, you get precisely that.

Issues With Using a Proxy

By far, the biggest downside to proxies is that they do not encrypt the data link between your device and the server. If your primary concern is online privacy and security, proxies are a poor choice.

Without encryption, your ISP (and by extension the government and any other company willing to pay for the information) can see, analyze and log everything you do on the Internet. Every website you visit, every file you download, it's all accessible.

Due to the lack of encryption, proxies also won't help you prevent bandwidth throttling, nor will they protect from potential intruders when using a public Wi-Fi hotspot.

Like a VPN, a proxy may slow down your Internet connection because data must first travel to the proxy server before reaching its final destination. However, what can have the most significant potential impact on speed is the performance of the proxy server itself.

Compared to a VPN, proxies may result in slower download speeds

Very often, proxies are run by individuals like you and I. In those cases performance is at the mercy of the server hardware and how quick its Internet connection is. Unlike VPNs, most proxy servers don't use load balancing. Where a VPN can spread traffic across multiple computers that are part of the same server cluster, proxies rarely do. So the more people connect to it, the slower it gets.

Because any individual with an Internet connection can run a proxy, you also need to keep something else in mind. Even though you gain a degree of anonymity by using a proxy, the owner of the server can still see everything you're doing.

With a VPN, once you pick a provider, you can research their privacy policies ahead of time. With a proxy, in the vast majority of cases, the owner is entirely anonymous to you. This is yet another reason why you should avoid proxies for anything where security or privacy matter.

There is one more important thing worth mentioning. You can find proxies set up as websites where, after going to a specific page, you type in the URL of another page you wish to visit. Think of it as manually making the connection between your device and a proxy server (the proxy website being the latter). More often than not this option is insecure and can be downright dangerous. Injecting malicious code into anything sent back to you is trivial. Avoid these sites if at all possible.

Proxy or VPN?

For me, the answer is easy: VPN. It allows you to do everything a proxy does but better. It's simply a much more versatile and complete solution.

Safety and Privacy

Both proxies and VPNs change your IP address. As a result, any website or service you use will be unaware of your true identity.

However, unless data is encrypted as it leaves your device, you're not hiding much. Your ISP (and anyone they sell or give their logs to) or a hacker can intercept and analyze your uploads and downloads. They'll know exactly what you're doing. If you're sending any personal information, they may also be able to read it.

A VPN uses strong, often military grade, encryption, making sure the above does not happen. A proxy, not so much.

Performance

Proxies are less resource intensive, which may be something to consider. Unlike VPNs, proxies don't need additional software installation, which saves storage. And they also don't encrypt your connection, which saves processing time. If you have an old phone or computer, a proxy may be just what the doctor ordered. But on pretty much all modern devices, slowdown due to encryption will not be a noticeable issue.

From all other angles, VPN performance will be the same or better than that of a proxy. Data needs to travel an extra distance to get to a server with either solution, so neither has an advantage there.

As far as the server itself goes, score one for the VPNs. Most proxies are run by individuals using server hardware and Internet connections which are not exactly top of the line. Throw a bunch of users on an ill-equipped server, and things may come to a grinding halt.

VPNs usually operate out of large data centers, with specialized hardware, and quick Internet connections. Some providers do better than others, as you can see in my speed test based rankings of the fastest VPN providers. But even those on the lower end of the scale will generally outperform proxies. For a VPN provider, running servers is a business. For most proxy providers, it's just a hobby.

Ease of Use

Even though every VPN provider requires the installation of its own client software and each implementation is different from the next, I still believe VPNs are much easier to use than proxies.

A proxy needs to be set up and turned on and off on a per-application basis. It can be a pretty tedious process (assuming the application has proxy support to being with). And if you want to change locations from, say, a proxy in the US to one in the UK, you need to go back and manually update each of those applications yet again.

Regardless of the provider and how they implemented their client, connecting to a VPN boils down to a simple two-step process. Pick the server through an interface in the VPN software, and click a single button to connect. It doesn't get much easier than that.

Conclusion

Proxies are a good solution if you need to hide your identity for simple tasks. Tasks which don't require much security, safety and for which Internet speeds don't matter. When performance, security or complete anonymity are important, a VPN is the only way to go. If you're not sure where to start, please take a look at my list of recommended VPN providers on the homepage. Any one of them would make a fine choice.

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