Its purpose is to prevent the website or service from knowing where the request originated by hiding your IP address and using a different one. That's why they’re called proxy servers: they act as a substitute for your computer.
If this doesn’t make a whole lot of sense, consider this example. You’re in Italy but you want to access a website in London. However, the website only allows those located in the UK to use its features, so you’d use a proxy server in the UK to hide the fact your IP address originates in Italy and make the website think you're in the UK.
Also see: Home Wi-Fi Network Security FAQs
How does a proxy server work?
When you sign up for an account with a proxy provider, you enter your account details in a web browser extension or in any software that supports a proxy server.
When the connection to the proxy server is established, all the information sent from that browser or app goes out via your ISP (internet service provider) then via the proxy server to the website or other server you want to access.
This makes it appear that the requests are actually coming from the proxy server, and not your computer.
Why would I use a proxy?
There are lots of reasons, and they’re pretty much the same as for using a VPN. You might want to watch a video that’s only available in a certain country (which you are not in) or you might want to read websites and don’t want them being able to track your or trace your real IP address (and therefore location).
You might be travelling in a country which prevents access to websites you use back home or you might want to access sites and services that are blocked by your employer – or your own government. It may be that several people in your household simply want to vote for their favourite act in Strictly Come Dancing or The Voice, but the fact you’re all using the same IP address means you can have only one vote and subsequent attempts are denied.
A proxy server will get around these restrictions.
What is the difference between a proxy and a VPN?
This is the important part. While most proxies will stop your IP address being handed over to the site you’re trying to access, proxy servers do not encrypt the traffic. This means that there may still be information being sent to the website you’re browsing that can identify you.
All a proxy does is swap out your IP address for a different one.
Plus, it's typically used for only one application. That means that your IP address will be masked only when you’re using the particular web browser in which you’ve set up the proxy. Use any other app on your computer – or any other browser – and your IP will be passed on as normal, and the usual restrictions will apply.
With a VPN, unless you're using a web browser extension or a browser - such as Opera which includes a VPN service, the traffic between your computer and the VPN server is encrypted, so no-one can see what you’re doing or what information is being sent. The encryption will apply to all data sent over your internet connection no matter which app is sending the information: even operating system services and app updates.
Also see: Are VPNs legal in the UK and Abroad?
Should I choose a proxy or a VPN?
To put it simply, a proxy is fine for anything which doesn’t matter too much, such as the TV show voting example above or even accessing Netflix videos from another region. However, if you’re trying to hide what you’re doing from a repressive regime or doing a bank transfer when overseas at a coffee shop on open Wi-Fi, it’s a very good idea to use a VPN.
It’s also worth pointing out that there are free proxy servers and free VPNs. They may work for you, but bear in mind that they’re either very limited on server locations, offer very small amounts of bandwidth so aren't generally suitable for streaming video or using for all your internet activity. Also you don't know who is handling your data or what they are doing with it.