What is a VPN & How Does it Work?

by Jenny on January 15, 2013

The internet has made it possible for institutions to conduct business from any location. However, this also exposed them to various threats of cyber hacking. The use of password protected software is not enough to prevent unauthorized users from stealing valuable information transmitted online. Thanks to VPN, computers in a network can communicate with one another in a secured zone through the internet. This article describes what is a VPN & how does it work.

What is a VPN?

VPN is the abbreviated term for virtual private network. It creates a secure connection among computers in a network in order that unauthorized users will not have access to their exchange of data. A VPN allows computers to do their transactions through the internet without the risk of intrusion by other users. It is like a private space that only members are allowed to enter. There are basically three types of VPN:

- Dial-up VPN. This is a type of VPN that allows remote access via connection to a local area network (LAN). Computers within a network use a system operated by a third party service provider to connect with one another. Companies use dial-up VPN to enable mobile employees to access the private network of the company and do their job from a remote location.

- Intranet based VPN. This allows employees in geographically separated offices to connect to one private network. This works well for companies with several branches from different locations. Through an intranet based VPN, these branches can securely access the main network to obtain, enter, or transmit information.

- Extranet based VPN. Different companies who intend to share information or communicate securely with one another use extranet based VPN. A company can have partial access to another company’s private network through a username and password.

How Does VPN Works?

A VPN employs several methods for safeguarding your data and connection. The use of firewall, encryption, and tunneling altogether makes it impossible for an outsider to infiltrate a network. The data being transmitted cannot be read by other computers. This is especially critical for businesses when processing sensitive information.

- Firewall. A firewall is a set related programs positioned in the network gateway server to protect the network from unauthorized users. The username and password determine the extent of access to the network by a member. In its literal sense, those within a firewall are kept safe from those outside. Firewalls should be impenetrable, and outsiders cannot enter unless they passed the verification system.

- Encryption. Encryption is the act of converting data into codes that only authorized computers can decipher. There are two forms of encryption: symmetric-key encryption and public-key encryption. With symmetric-key encryption, each computer has a secret key that it can use to encrypt the data before it is sent over the network to another computer. In other words, computers in a network communicate in a language that only they can understand. Meanwhile, with public-key encryption, a computer uses both a private key and a public key to communicate securely with another computer. When an encrypted message is received, a computer will use both keys to decode it.

- Tunneling. Also called encapsulation, tunneling is the transmission of data intended for use only within a private network through the internet. It is done by fragmenting the data into smaller packets and then passed through the tunnel. The tunnel is a logical path between two points: the source and the destination. The packet is encapsulated at the source and then de-capsulated at the destination. There are two types of tunneling:

- Voluntary tunneling. Voluntary tunneling is initiated and managed by the client. The client is the user computer, and also the end point of the tunnel. Here, the user sends a request to the server to configure and create a voluntary tunnel through a dial up or LAN connection.

- Compulsory tunneling. Compulsory tunneling is managed by a carrier network provider. A tunnel is created without any action from the client. The client connects to a NAS that then tunnels data transmission to and from a VPN gateway.

Suggested Readings:

What is a Proxy?

Why is VPN Better Than Proxy?

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