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Proxy vs VPN: What Are The Differences?

If you spend any time on the internet today, you‘ve likely heard about tools like VPNs (Virtual Private Networks) and proxies that can enhance your privacy and security online. However, while proxies and VPNs have some overlap in their functionality, there are some distinct differences to be aware of. In this comprehensive guide, we’ll break down the key characteristics of each and when you should use proxies vs VPNs.

How Proxies Work to Mask Your Identity

First, a quick primer on how proxies work.

A proxy server acts as an intermediary that sits between your computer and the wider internet. When you connect through a proxy, it makes requests on your behalf. So when you visit a website, it sees the IP address of the proxy server instead of your actual IP address.

This allows proxies to hide your identity and “mask” your real location.

Some common types of proxies include:

  • Residential proxies – These use IP addresses actually assigned to home users by internet service providers. This allows residential proxies to mimic real user traffic patterns, which is invaluable for use cases like web scraping at scale.
  • Datacenter proxies – Provided by large server farms and datacenters, these proxies offer faster speeds but are easier to detect and block.
  • Shared proxies – Used by multiple users concurrently to keep costs low, but this reduces performance as more users share the same IPs.
  • Semi-dedicated proxies – Limit a proxy’s use to a smaller set of users for improved performance compared to shared.
  • Private proxies – Dedicated to one user only for maximum performance and anonymity. But they come at a higher cost.

In addition to hiding your real IP address, some proxy services will also encrypt your internet traffic for added security, though this isn‘t their primary purpose.

Proxies are commonly used for web scraping, accessing geo-restricted content from other regions, hiding your physical location, and retrieving data anonymously at scale across the web.

According to DataProt, the global proxy services market is forecast to grow from $1.79 billion in 2024 to over $3.3 billion by 2030, as demand for web scraping and need for anonymity increases.

How VPNs Route Traffic Through Encrypted Tunnels

A VPN, or Virtual Private Network, also hides your IP address by routing your traffic through an encrypted tunnel to the VPN server. But the way VPNs work has some technical differences.

When connected to a VPN, all internet requests from your device are encrypted and redirected through the intermediary VPN server. This creates an encrypted “tunnel” between your computer and the VPN provider’s network.

Their server assigns you a new IP address from their network, masking your real location and identity. It also prevents third-parties from snooping on your traffic since it’s protected in the encrypted VPN tunnel as it passes through the internet.

Some key benefits of routing your connection via VPN include:

  • Privacy – Masks your IP address and physical location from websites.
  • Accessing blocked content – Allows you to bypass geographic content restrictions and access region-locked sites by appearing to connect from the VPN server‘s location.
  • Encryption – Secures all data flowing between your device and network to prevent spying.

However, rerouting all your device’s traffic through the encrypted VPN tunnel comes at a cost – reduced connection speeds. VPNs noticeably slow down your internet compared to a direct connection.

The global VPN market is booming, expected to grow from $31 billion in 2021 to over $107 billion by 2028 according to Fortune Business Insights, as consumers seek greater privacy.

Key Differences Between VPNs and Proxies

While VPNs and proxies allow you to hide your IP address and encrypt your traffic, there are some notable differences:

Ease of Use

VPNs are designed for regular consumers who just want a simple app or program to browse privately. Proxies are more complex to set up and optimize, geared more towards tech-savvy users.


Proxies excel at collecting data anonymously across the web, like for web scraping or market research. VPNs aim to encrypt all your general internet activity for privacy.

Traffic Handling

VPNs handle and encrypt all your device’s internet traffic. Proxies target and optimize specific types of traffic like web scraping.

Speed & Performance

The encryption overhead of VPNs slows your overall internet speed. Proxies only add minimal latency for their intended workloads.


VPNs are better for casually accessing consumer media content blocked in your region. Proxies specialize in programmatic data extraction.


Proxies allow you to imitate many real residential IPs. VPNs focus on personal privacy more than complete anonymity.


VPNs encrypt everything end-to-end. Proxies mainly anonymize traffic but don’t always encrypt it.


VPNs are very affordable for individuals. Proxies get extremely expensive for large scraping and data mining operations.

To visualize some key differences:

PurposeGeneral privacy, accessWeb scraping, data collection
TrafficAll device trafficSpecific targeted traffic
SpeedSlowerFaster for intended use
AnonymityPersonal privacyMimic users at scale
EncryptionFull end-to-endOptional
CostCheap for individualsExpensive at scale

When Should You Use a VPN vs Proxy?

So when should you use a VPN versus a proxy?

For most regular internet users who want a bit more privacy, security and access to some extra content, a VPN is likely the best choice. They‘re affordable and easy to set up while providing robust encryption and anonymity for everyday browsing.

On the other hand, serious web scrapers, data miners, researchers, and businesses needing to anonymously collect vast amounts of online data should strongly consider using a proxy service. While proxies require more customization and cost significantly more, their flexibility and ability to mimic organic user patterns at massive scale is unmatched.

Professionals in my field with over a decade of experience will almost unanimously recommend proxies over VPNs for completing large-scale data extraction projects without getting blacklisted. The ability to rotate between thousands of realistic residential IPs is a complete game changer versus VPNs for serious web scraping work.

Some other examples of ideal proxy use cases based on my experience include:

  • Price monitoring – Track prices across competitor sites to adjust pricing algorithms.
  • Travel fare aggregation – Collect flight/hotel data to build comparison platforms.
  • Market research – Gather real-time consumer trends from forums, reviews, social media.
  • Real estate data – Scrape listing info like prices and home details.
  • Weather data – Harvest weather model data and historical records.
  • E-commerce analytics – Analyze product availability, pricing shifts, inventory changes.

In some cases, proxies and VPNs can even complement each other – for example, routing your proxy connection itself through an encrypted VPN tunnel for added security.

Wrap Up

While VPNs and proxies share some common functionality for anonymity online, taking time to understand their distinct strengths allows you to pick the right tool for your specific use case.

For most personal privacy, security and access goals, VPNs offer an affordable plug-and-play solution. But when advanced anonymity and the ability to programmatically imitate organic web traffic at immense scale is needed, specialized proxy services simply can‘t be beaten.


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