What’s the Difference Between a Proxy and a VPN?

What’s the Difference Between a Proxy and a VPN?
Both proxy servers and virtual private networks (VPNs) are intermediary technologies between an organization’s internal corporate network and the public internet. Your organization may route all incoming and outgoing network traffic through a proxy server, VPN, or both. A proxy server provides traffic source anonymization. It may also support traffic distribution, or potentially scan and check network data packets against predetermined security policies. In contrast, a VPN uses encryption to mask both the IP address and data so it’s unreadable by unauthorized users. Both technologies fulfill different use cases determined by their position in an organization’s network architecture.

How does a proxy server work?
All communication over the internet takes place via data packets. Applications and user devices exchange data in the form of requests and responses. A client sends a request to any application or web server by using the server’s IP address, and the server sends back the response to the client’s IP address.

In a direct network connection, both the client and the server know each other’s IP addresses. However, the proxy server introduces another layer between the client and the server. You can use a proxy server before the client (forward proxy) or your application server (reverse proxy). These methods work as follows.

Forward proxy servers
Here’s how clients and servers interact when you use a forward proxy server:

When the client sends a web request, it first goes to the client’s proxy server
The proxy server replaces the client’s IP address with its own IP address
The proxy server forwards the web request to the application server
The application server processes the request and sends the response data back to the proxy server
The proxy server forwards the response back to the client
When you use a forward proxy server, the server is not aware of the actual client and thinks the proxy is the client.

Forward proxy servers are helpful in use cases where internal company devices are the client. For example, when your employees browse the internet, their requests can go through the proxy to other third-party applications. The forward proxy protects and anonymizes private network data from outsiders.

Reverse proxy servers
A reverse proxy is an intermediary server between the servers that host your applications and your end users. The reverse proxy monitors and intercepts all incoming internet traffic before it reaches your applications. It scans your visitor traffic for unauthorized activity.

Web administrators can configure a reverse proxy to block specific traffic sources. The reverse proxy only forwards requests that comply with its security policies to your application server.

Reverse proxy servers add an additional layer of security, anonymity, and traffic distribution management to your application or database servers.

How does a VPN work?
A virtual private network (VPN) combines encryption with a proxy server to create a more secure communication channel. The underlying technology encrypts and routes client traffic to a VPN server that further anonymizes the IP address and routes it to third-party websites. In such use cases, you can think of VPN servers as forward proxy servers that also encrypt data.

However, VPN technology has more advanced applications depending on how the encryption is set up. Organizations can use a client-based VPN or a site-to-site VPN.

Client-based VPN
To use a client-based VPN, you install a VPN client application on a remote device. The device user then uses the VPN client application to connect to your organization’s network.

The VPN client creates a secure connection between the remote user and the network by using IPsec. IPsec is a set of communication rules or protocols that add encryption and authentication to the standard TCP/IP protocol to make it more secure.

A client-based VPN protects network data by setting up encrypted circuits, called IPsec tunnels, that encrypt all data sent between two endpoints. In effect, it creates a private communication tunnel between a remote user and your organization’s network.

Read about IPsec »

Site-to-site VPN
A site-to-site VPN acts as an internal private network for companies with multiple geographically separated locations. It seamlessly and securely connects different intranets over IPsec, which allows employees in your organization to share resources between different internal networks. A site-to-site VPN creates a private communication tunnel between intranets.

Key similarities: proxy vs. VPN
Both proxy servers and virtual private networks (VPNs) improve privacy and security for organizations. Employees can browse the internet safely and anonymously with either a proxy server or a VPN. Both VPNs and proxy servers anonymize the organization's internal IP address.

Similarly, individuals can obtain VPN services or sign up with proxy service providers to browse the internet anonymously. In such cases, the VPN provider lets the individual user access the internet over an encrypted tunnel and a proxy service routes user internet activity through a proxy server. There are many free proxy connections and free VPNs available in the market for individual users.

Key differences: proxy vs. VPN
For organizations, a virtual private network (VPN) service has broader applications and capabilities than a proxy server because a VPN has encryption. Most organizations prefer using only a VPN instead of both a VPN and a proxy server.

Next, we discuss some key differences between VPNs and proxy servers.

Outgoing network traffic
Forward proxy connections hide an employee's IP address from the web server the user visits.

A VPN connection hides the user’s IP address and location so they cannot be identified. At the same time, it uses end-to-end encryption with IPsec so that an internet service provider (ISP) or any external routers also can't access user data. Employees can exchange sensitive data securely, as unauthorized third parties cannot read the encrypted communication.

Incoming network traffic
Reverse proxy servers can screen and control traffic to your application servers. However, they still allow any outside source to send traffic to them.

VPN connections only allow authorized traffic to come into the network. Only those devices with the remote-access VPN client can access the company network. This way you gain greater control over incoming connections.

Load balancing
An application server might be overwhelmed by web requests during peak periods. A reverse proxy server can act as a load balancer and distribute the requests to backup servers.

VPNs do not provide any load balancing functionality.

Summary of differences: proxy vs. VPN
     
Proxy 

VPN

Role in client server communication

A proxy server anonymizes communication between the client and server.

A VPN anonymizes and encrypts communication between a client and server.

Incoming traffic

A reverse proxy server screens and distributes incoming traffic. You have no control over the traffic that reaches the proxy server.

VPNs encrypt traffic between VPN client software installed on remote devices and the corporate network. You control who has network access.

Outgoing traffic

A forward proxy server anonymizes outgoing traffic.

VPNs anonymize and encrypt outgoing traffic.

Example use cases

Reverse proxy servers support load balancing and traffic distribution.

Client VPN allows remote users to connect securely to the organization’s network.