VPNs:
What you need to know:
A VPN is similar to a proxy server with a much greater level of protection. Not only is your IP address protected when you surf, but it's also protected when you do anything on the Internet, including using Skype or connecting to Usenet Servers or Peer-to-Peer networks. More importantly, VPN also encrypts everything that goes through your service provider, whether that be an ISP, a public hotspot or hotel connection, or your employer's internal network. It does not replace your internet connection - you still need a cable, DSL, or hotspot account to use a VPN service.
If you're looking to really protect your identity and traffic, a VPN connection is what you want to use.
Click here to jump to the Anchordudes' list of VPN Service Providers.
More than you wanted to know:
What is VPN?
In the beginning, big companies used to connect their offices by buying or installing dedicated lines between them. They could send any kind of information without fear that others outside the company could see it because they were the only ones using those lines. As the Internet grew and more and more communications companies (like ATT, Worldnet, etc) started laying massive amounts of all over the place, a new way of connecting offices privately came along - the VPN (Virtual Private Network).
In a nutshell, they came up with a way to encrypt the data they were sending between offices and send it back and forth over the public internet. No one along the way cold see what they were sending back and forth, they couldn't even tell what kind of data it was. It could be spreadsheets, database files, even real-time voice. They had one (or more) big servers at each location connected to the internet through an ISP or backbone provider, and all the individual computers in the office were connected to that server(s). Then they sent the encrypted information between the big servers via the Internet. They were effectively creating a "tunnel" through the internet, hence VPN's are often also called a "Secure Tunnel." This was much cheaper than setting up dedicated lines between offices, and let them connect in small offices that were too small to justify running a direct line to.
Over time industry standards were developed and the encryption became more and more secure. Initially it took a strong server on both ends of the connection to encrypt/decrypt the data at a rate fast enough to not get in the way of normal internet use. But as regular desktop and laptop computers got stronger it became possible to run Windows, Mac, and Linux software that let individual employees use VPN to become one-person branch offices over their home cable or DSL connection. Since ALL the home employee's traffic gets encrypted and sent to the company's network first, that means that when the home employee surfs the 'net, they are actually connecting to their end destination THROUGH the company's outward facing internet connection. To any website they connect to, it looks like they are sitting in the office headquarters, even though they are really at home in their pajamas.
Outside the corporate environment, third party VPN services let you use them as if you were an employee and they are the central office. Every byte you send anywhere on the Internet goes over the VPN connection to the VPN company first and then gets sent from their servers using their IP. All the data flowing in to and out of your computer is encrypted so your Cable or Phone Company (ISP) can't read it and goes exclusively to the VPN company's servers. There it is decrypted and sent on to its destination (web site, peer-to-peer connection, Usenet server, etc) in an un-encrypted form, but also without your IP address. Depending on where the VPN company's server is, it may also appear that you are connecting from a completely different town or even country! NOTE: there are protocols that let you profile what goes through the VPN connection and what bypasses it, but few users have the stomach to set up all the tables needed to do so.
VPN services have become so important that most modern operating systems include built in support for the basic protocols, and drivers for most operating systems allow the latest and best technologies to be added easily. VPN is even available for many smartphones like the iPhone and Blackberry. The addition of encryption/decryption functions built in to the newest Intel CPU's has reduced the overhead needed so that end-user performance is impacted very little if at all.
There are a number of downsides to VPN's
First, home internet users have some sort of router connected to their Cable or DSL modem - and this router acts as a bouncer for the internet connection by using a Network Address Translation table - your internal IP address is hidden from the outside world. It blocks unwelcome attempts to send data to your computer even before it gets to your computer. But with a VPN your data is encrypted as it flows through the router, effectively connecting you directly to the internet again. This means all the hackers who randomly pick IP addresses and try to break in to them can see your computer directly. You will be surprised how many times per second your PC's firewall (assuming you have some installed and turned on) will be turning away unwelcome requests.
Ping times (the time it takes for the leading edge of a packet of data to get from one computer to another) can skyrocket. While data may flow at high speed through a good VPN service, it takes longer for each piece to make the trip since it must not only be encrypted and decrypted, but it must also travel from your computer to the VPN server, and then from the VPN server to the intended destination. This can make many online games (MMO's) unusable.
It can put a strain on your computer or smartphone. Newer computers and smartphones have encryption/decription suborutines built in to their chips, allowing them to run old and new algorithms without slowing down. But older computers and some early netbooks do not - all the data coming in and out of your internet connection must be decyphered using the same resources as all the other programs running on the computer. For this older hardware you may need to restrict yourself to the simpler, less secure encryption levels like PPTP.
Throughput speed depends on a lot of factors that you can't control: namely the size of the VPN company's internet connections and the power of their servers to encrypt/decrypt traffic. You will need to do some research in to the company you choose to be sure they can handle the load.
Summary: If you travel often and must use public hotspots, are concerned about back-tracing of your IP address, log on from a location like work where you are restricted from going to certain sites, or you are in an area where your Internet Service Provider (ISP) plans to throttle or restrict bandwidth for certain kinds of internet traffic, a VPN is a very good service to consider. Just be sure to sign up for the right size account and add-on services.