A virtual private network (VPN) is an Internet service that allows users to access the Internet as though they were connected to a private network. VPNs encrypt Internet communications to protect their privacy and keep user activity anonymous by disguising the user’s IP address. The main disadvantage of using a VPN is bandwidth and latency restrictions that may affect online services’ performance.
A VPN works by creating a secure tunnel between a client device and a VPN server before forwarding the traffic onto the Internet from the VPN server. This prevents any third party from intercepting communications along this path from being able to read the information being sent. This also prevents an ISP from monitoring and recording the internet traffic and replaces the user’s IP address with one assigned by the VPN server that is not associated with the user. Typically VPN service providers allow the user to select from many different VPN servers located in various countries worldwide.
VPNs are typically implemented using software installed on the client device. However, options are available to implement the VPN on a router to protect all devices connected through that router.
Cisco has a great explanation of VPNs here.
The key benefits of using a VPN service include:
The user’s internet traffic between their client device and the VPN server is encrypted to prevent eavesdropping or a man-in-the-middle attack when the user is accessing the Internet over an unencrypted network such as a public Wi-Fi hotspot.
The user’s internet activities in terms of browsing history, services accessed, and information sent is hidden from the user’s ISP. This prevents the ISP from collating records of these activities and sharing the aggregated information with third parties such as advertising agencies.
The user’s IP address is hidden from all websites and services accessed over the Internet prevent the websites from tracking the user’s activities and linking them to the user’s identity. This prevents the website owners from using this information to target advertising or share the information with third parties such as advertising agencies.
The user can circumvent geo-blocking restrictions to access content that is not available in the location determined by the IP address allocated by their ISP. This counters problems where the ISP assigns an IP address registered in a different country to where the user is physically located.
VPN encryption can help prevent ISP throttling for certain types of internet traffic such as streaming video files and preventing the ISP from identifying the types of traffic flowing through the VPN tunnel.
Not all VPN service providers are the same. Reputable premium services offer greater security and privacy over other services, particularly free-to-use and low-cost VPN service providers. Not all VPN service providers fulfill the critical benefits of using a VPN service listed above. In particular, not all offer a no-logging policy to keep internet activities private. Many VPN service providers include provisions for sharing such data with advertisers in their terms of service.
One weakness of VPN regarding anonymity is that VPN services are comprised of a network of servers maintained by a centralized entity. Techniques are available to sophisticated attackers and government agencies to monitor network traffic and deduce associations between traffic and users. As an alternative, TOR operates as a decentralized network offering more robust anonymity at the expense of more intrusive bandwidth and latency restrictions and more significant installation and configuration complexity.
Before you decide if a VPN service is right for you, always check that the use of a VPN is legal in your country. At the time of writing, the use of VPNs is illegal in Belarus, Iraq, North Korea, and Turkmenistan. The use of VPNs is also restricted in China, Iran, Oman, Russia, Turkey, and UAE.