VPN vs Proxy – What is the difference?

7 min

VPNs and proxies are both online services that can alter the way you connect to the Internet. The comparison between them is a discussion that never gets settled. Even though a lot has already been said and debated about their similarities and differences, there are still a lot of questions and misconceptions surrounding them and their usage.

As a residential VPN company, it is our responsibility to set the record straight. In this article about VPN vs proxy, we will look at their differences, similarities, and conclude the situations in which they individually excel. There are also our recommendations on selecting the right tool to protect your privacy online.

Is a VPN a Proxy?

Some might argue that ‘technically’ a VPN server is a sort of proxy. Practically claiming these two are the same is a misunderstanding. There are important technological differences. As a result, they have separate applications. A fork is a tiny bit similar to a spoon, but you wouldn’t use them interchangeably! And more importantly, what would you think about somebody who sold you a box of spoons with only forks inside? That’s a fraud!

Unfortunately, the Internet is not the safest place in the world. A misleading name of a system could be a part of a scam. Fraudsters advertise a cheaper service as the more expensive one and trick people into stealing their personal data and even their money. Don’t be fooled! Let’s get to the point.

Difference Between a Proxy and a VPN

Those two systems were created for various reasons. As with many IT technologies, over time, they’ve grown to be quite sophisticated. Let’s introduce them one after another.

What is a Proxy in Online Security?

By definition, a proxy is something that acts on behalf of you, a sort of intermediary. In the online world, it is a piece of software or hardware performing actions on behalf of a web request.

The client (for example, your Internet browser) sends requests all the time and receives Web content in return. Such inquiries aren’t sent directly to the destination server. Data packets travel via many devices and paths, sometimes through half of the world. The proxy is a specific stop on the way, where a request isn’t just passed on, but another request is made on its behalf.

Many institutions, like Internet Service Providers (ISPs), use proxy servers to automatically handle Web traffic in their network according to a specific policy. Your request is processed based on your IP, protocol type, contents, destination address, and other parameters. Proxy servers, in this case, mostly serve for data transfer optimization or formalities. Haven’t paid the bill? Sorry, no Internet for you. Opening the same web page over and over again? Here’s a locally cached copy; it loads faster. Accessing adult-oriented pages from a school Wi-Fi? Blocked and reported to the administrator!

There is also another sort of proxy: an online service you can use as an intermediary between you and the rest of the Internet. It sounds like a redundant hassle, but it can be purposeful.

First of all, it’s a way of circumventing some restrictions. Organizations, ISPs, and some governments reserve the right to suppress access to chosen websites in networks they supervise. A way around it is to use a remote, unrestricted service (a proxy) to fetch blocked content on one’s behalf.

For example, assume you are based in Beijing and want to access a video streaming website that is restricted to users in India. To access the site, you would want a system that mimics your location to be that of India. You can use a proxy server based in India to route your traffic through it, thereby accessing the videos on the site.

Using a proxy is extremely common today, with netizens using it for everything from unblocking Netflix to removing content and IP-based filters. The two types of proxy servers available are HTTP and SOCKS.

However, it does come with a few downsides. For starters, a proxy server merely swaps your IP address with another one. There is no extra layer of protection through encryption. Moreover, a proxy connection is often application-based. You usually set up a proxy on a specific application (like a web browser or P2P software). This means that only the application’s traffic is routed through the server; the rest of the traffic from your device is still bare and uses your original IP address. 

When we compare a proxy with a VPN, this is where the main difference lies.

Note: When we talk about ‘proxy’, we are essentially talking about a ‘proxy server’. The terms are used interchangeably and mean the same thing.

What is a VPN or Virtual Private Network?

Virtual Private Network was invented to extend non-public parts of the Web outside their physical locations without using any extra cables. Intranets are often installed within offices to allow employees access to confidential company information. After leaving the premises, they can still access it by constructing a logical (not physical) VPN tunnel.

A virtual private network, just like a proxy, also hides your IP address by routing your Internet traffic via another server. However, there is an additional step of encryption. Between your computer and the VPN server, your traffic undergoes strong encryption, thereby maintaining your privacy. In this case, both your internet connection and traffic are covered.

VPNs can be both application-based and standalone, the latter of which can help safeguard all your Internet-based activities. For example, you may use our VPN extension for Google Chrome to swap your IP address for traffic originating from your browser. On the other hand, the TuxlerVPN application for Windows and macOS will help you protect all traffic from your computer.

As you can see, a VPN provides better security as compared to proxy servers. However, what they provide with security, they compensate with performance and cost. In most cases, a VPN will increase latency and reduce the speed of your Internet connection (in some cases, it will do the opposite, though). Proxies are notorious for that too, but their impact on your connection is nominal.

Comparison: Proxy vs VPN

To make things clearer, here’s a table describing the major differences between a proxy server and a VPN.

Hides IP address and encrypts trafficOnly hides IP address
Can cover entire devicesCovers individual applications
Usually paidUsually free or cheaper
High latencyLow latency
Uses advanced protocolsUses basic HTTP or SOCKS protocol

Residential proxies vs residential VPNs

When searching the Web for info about the two services, you might have found the word ‘residential’ pop up from time to time. What do online services have to do with someone’s house? Quite a lot, as it turns out. They use real people’s locations!

What is a residential proxy?

A ‘classic’ proxy uses the IP of a server located at a datacenter facility. Such addresses are public, so they can be recognized by smart filtering software and banned. Using this sort of proxy might not be enough to circumvent a blockade!

However, there is a huge amount of IP addresses assigned to ISPs around the world. They distribute IPs among their clients. Such IPs are tied to personal devices, like a PC or home router.

The residential proxy uses a pool of home IPs instead of datacenter IPs. Therefore, every connection you make through such an intermediary appears as if it was made by a person from a specific location. It’s virtually impossible for the blocking programs to recognize that it is actually a proxy, not a direct web request. It might work slower than the datacenter proxy, depending on local network capabilities.

What are residential VPNs?

We already explained what ‘residential’ means in the context of indirect Internet connections. A residential VPN is analogous to a residential proxy. It also makes use of a bundle of co-shared IP addresses.

Typically it looks like this. Every user who connects via a certain residential VPN service agrees to add his/her personal IP to the pool. In return, he is allowed to use somebody else’s IP as the endpoint of the VPN tunnel. Every residential proxy or VPN online service has an algorithm responsible for choosing which specific IP is assigned. It might be periodically changed for better anonymization. The advantage is that such a mechanism is undetectable for firewalls striving to pinpoint and suppress VPN usage.

Comparison: residential proxy vs residential VPN

The difference between these two residential systems is the same as between a ‘normal’ proxy server vs VPN. They simply use different underlying mechanisms. The proxy redirects web requests and alters the IP address. VPN constructs a safe tunnel, which protects all the data transfer with encryption. What are the consequences?

VPN link acts at a system level. Thanks to this feature, providers have created numerous VPN apps for both Windows and Mac to manage connections to their servers. All the connections from the user’s computerare enclosed inside the tunnel.

With a proxy, it’s more complicated.  A link to the proxy server works at the application level, which means that apps on your device can use various proxy settings. Not all of them are easily configurable. There are client proxy apps out there that force every program to connect via proxy. However, those are mostly not free of charge.

Costs make an important difference when choosing a proxy or VPN. Running a VPN server isn’t cheap. It requires handling large amounts of VPN tunnels simultaneously. Proxies are generally cheaper because such connections are computationally less expensive.

However, if any of those services claim to be 100% free, be careful. The provider must somehow make money, for example, by selling paid premium subscriptions with unlimited transfers or displaying advertisements. It’s worse if your supplier logs your data transfer and sells it to third-party advertisers – this actually invades your privacy instead of protecting it!

What to Use: Proxy or VPN?

The answer to the question boils down to what you are planning to do. If you are looking to bypass geographical restrictions to access a website, both a proxy server and a VPN will do the job. This same applies to use cases such as tackling censorship and unblocking streaming websites.

If you are looking to protect your privacy from snoopers such as surveillance agencies, you are better off using a VPN that provides encryption. This is because a proxy server will simply pass on your traffic via itself; a VPN will also encrypt your traffic and swap your IP address.

To put their applications into perspective, know that a VPN can do everything that a proxy server can. But a proxy can only mask your IP address for a single application at a time.

Have more questions now that proxy vs VPN comparison is behind you? Check out the TuxlerVPN blog for more informational content on residential VPNs and other online security tips and best practices.

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