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Proxy vs VPN: What is the difference?

Updated on August 13, 2014

VPN vs Proxy: The Basics

So in the post Snowden internet era, you've discovered that your online activity is not as private as you used to think. The solution to increased online privacy is a private encrypted connection that will increase your online anonymity, but you're faced with 2 choices when shopping for you new security solution:

  1. A Virtual Private Network Service (Commonly known as a VPN)
  2. A Proxy Service

Though both services can accomplish many of the same objectives, they do have a few important differences that will make one better than the other for your needs depending on what you want to use them for.

What is a Proxy Service?

A proxy service allows you to route the internet traffic for a specific application, program, or protocol through a remote server, giving you greater anonymity (as the IP address associated with that program will be the IP of the proxy service, not your own computer).

The proxy server could be located in the same city, state, or country as you currently live in, or in a different country or continent altogether, you would choose based on what your trying to accomplish. For example if you live in China and you're attempting to unblock websites that are restricted by the "Great Firewall of China" you might use a proxy service located in the United States where internet access is free and unrestricted.


It is possible to "Encrypt" a proxy connection. This is essentially means that all data that travels between your computer and the proxy server is scrambled and unreadable by anyone unless they have the decryption key (password). Not all proxy services offer encryption, but many do.

Common uses of proxy services:

Since proxy servers are easier to set up than VPN's, they are often used for simple tasks like bypassing office firewalls (using facebook at work), anonymously viewing websites, and keep sensitive connections like Bittorrent anonymous. Many Bittorrent users will set up their client software to connect through a proxy server, because without it their true IP address and location would be visible to anybody participating in the same bittorrent swarm as they are.

What is a Virtual Private Network (VPN)

A Virtual Private Network (commonly referred to as a VPN) is a service that always you to route your entire internet connection through a known 3rd party server (usually in a separate location from your home network) with strong data encryption in between the home server and the remote server.

Because the traffic is routed through the VPN server before reaching the rest of the internet, subscribers receive a greater level of anonymity and privacy online because the only connection directly facing the internet is the VPN server, so all websites you visit while connected to the VPN will only see the location and IP address of the VPN server you're connected to, not the true IP of your home network.


All consumer and enterprise level VPN services are encrypted, meaning the data transferred between your computer and the VPN servers will be unreadable by anybody without the secure encryption key (like a super strong password). Any VPN using OpenVPN technology (almost all of them) will have a minimum encryption strength of 128-bits, which is considered unbreakable by brute force attacks, and may have encryption strength as high as 1024-bit.

Common Uses for VPN:

VPN's first gained wide use by businesses with sensitive data that needed to be transmitted by employees working remotely. VPN's allowed such users to also connect to the office computer network as if they were working at their desks. VPN systems like this could be extremely expensive.

With the advent of the Personal VPN, prices have dropped massively, making VPN services affordable for anyone with a need for privacy. A VPN can help prevent identity theft, credit card fraud, and protect your anonymity and privacy online when posting on forums or visiting websites.

They also allow freedom of virtual location as you can appear to be connecting from almost anywhere in the world.

VPN's are perfect for:

  • Shopping online
  • Transferring sensitive personal data like social security numbers
  • Encrypting your email communication
  • Watching Netflix and Hulu (you can access them from anywhere in the world)
  • Posting on forums and websites anonymously
  • Unblocking websites restricted by an office firewall or even national firewall.
  • Downloading files anonymously on file sharing networks like bittorrent.

Proxy vs VPN: Differences

A proxy and a VPN can achieve many of the same things, and are both routed through a remote server with optional encryption. There are some key differences however that should be considered when choosing between them.

Difference #1: Whole connection or 1 program

A VPN adds encryption and anonymity to your entire internet connection for a computer (or an entire network if you configure you're router to connect through the VPN). As a result, any and all internet traffic will be routed through the VPN server when the connection is active. This usually desirable since you don't have to worry about how to protect multiple program's simultaneously or remember which program is setup for the proxy server.

One case that could come up, however, is when you want to use 2 services that require different locations. For example, if you like to route your torrent traffic through a netherlands server and you want to watch Netflix at the same time, you'd be better off with a proxy, so you could just configure you're torrent client to use the proxy server and keep the netflix on your standard connection.

Remember a you can only have 1 program connected to the proxy server at a time, although some providers do allow multiple simultaneous connections, but you'd have to configure each program separately. A VPN is an all-in-one solution and installation is usually as easy as downloading a small piece of software, typing in your password, and clicking connect.

Difference #2: Encryption Strength and Speed

Encryption strength and speed are at odds with each other. Because the encryption tunnel takes up extra data and processing overhead, if you increase the encryption strength of the connection, the speed will go down. Everything else being equal, a proxy connection will be slightly faster than a VPN connection running on the same server, due to the lighter encryption strength.

Also remember, that while all VPNs have encryption, some but not all proxy services will offer it. Without encryption, anybody intercepting your data can read its contents and see what sites you're visiting and files you're downloading. One organization that will have unavoidable access to your data stream is your Internet Provider (ISP). All your data will be routed through their network before reaching your VPN server. If you're data is unencrypted, they can "sniff" the data packets and see exactly what they contain. With a VPN, your ISP has no idea what you're doing online, other than connecting to a 3rd party server because the encryption blocks their ability to read your data.

Bottom Line: Do I need a VPN or Proxy?

Choose a Proxy if:

  • You only need to route one program/app through the proxy
  • You don't need strong encryption
  • You just want it for filesharing/torrents
  • Speed and price are your top priorities

Choose a VPN if:

  • You need to protect your entire internet connection
  • Strong encryption is important to you
  • You don't need to route software outside the VPN tunnel
  • Security and power is more important than price

The Best VPN and Proxy Services

Check out our list of the best VPN and proxy services online. We even found some VPN services that include free proxy service as a bonus, allowing you to use both simultaneously.

VPN's that include a free Proxy Service:

Other Great VPN's:

  • IPVanish. No logs, fastest network of any VPN provider I've tested.

The Best Anonymous Proxy Services:
Both of these proxy services are terrific. Neither one keeps any logs or retains any usage data, and both allow filesharing software like BitTorrent to be used on their networks. Pricing starts under $5/month with an annual plan and both accept anonymous payments through Bitcoin as well as easy conventional payments through paypal.

Torguard Proxy - Torguard proxy has both auto-install and manual setup options. Torguard also offers anonymous VPN service and encrypted webmail, or you can get all 3 at a substantially discounted rate.

BTGuard Anonymous Proxy - BTguard was the original anonymous proxy service and still the most popular anonymous proxy service in the world.

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    • Sahrzad8 profile image

      Sahrzad 3 years ago from UAE

      Thank you, very informative