What is the difference between proxy and VPN? VPN protect your IP, encrypt and secure all of your network traffic. VPNs are set up at the operating system level, and the VPN connection captures the entire network connection of the device it is configured on. If you use VPN, remote server will receive routing information created by your OS. Proxy server connections are configured on an application-by-application basis, not computer-wide. Proxy gets response and data from remote server (IP, ports, other parameters), creates packet from its end and forwards packet. Different OS create packets differently. Differences can be even between OS versions. A proxy is ideal for basic functions like anonymous web browsing and managing (or circumventing) content restriction.