TL;DR (Focused Takeaway)
A VPN can improve your online privacy (though it can’t provide complete privacy).
Implementing a VPN provides a balance between speed and convenience.
A VPN hides your location from the websites you visit, and hides the websites you visit from your ISP.
Some governments take steps to block VPN use.
VPN providers can be hacked or subpoenaed.
Even if you use a VPN, you still need to protect yourself from malware and other online threats.
We do not recommend using free VPNs from commercial companies.
What is a VPN?
A Virtual Private Network (VPN) is software that encrypts your online data and sends it through another computer, making it harder for others to see what you do online. This improves both security and privacy.
A VPN’s encryption layer adds extra security. For example, if you’re connecting to an unencrypted service (a website that uses http instead of https) or a weakly encrypted service (even an https website can have a weak configuration), the VPN’s encryption helps prevent eavesdroppers on your network from seeing your traffic.
A VPN connection also provides privacy because it wraps and transmits your data through another computer (the VPN server). Sending data through this “secret tunnel” limits the amount of online activity your Internet service provider can observe. And the Internet service you’re connecting to can’t see your home IP address or physical location. Instead, your Internet traffic appears to come from the tunneled VPN server.
Using a VPN can help protect you from prying eyes.
Who uses VPN?
People use VPNs for a variety of reasons. They may want to:
- Adds a layer of encryption as protection against eavesdroppers when using untrusted wireless networks.
- Securely connect to your employer’s network to access services or systems on the internal business network.
- Pretend to be in a different location to avoid rules (for example, some online services restrict the countries in which they serve you).
- Hide your activities from your Internet Service Provider.
- Hide your activities from the government or police.
Ultimately, a VPN is a tool that enhances your data protection and privacy, whether legal or illegal.
When should cryptocurrency consumers use VPN software?
Cryptocurrencies have prioritized user privacy since their inception. Section 10 of the Bitcoin whitepaper is devoted to “Privacy,” making a clear distinction between the identity of a cryptocurrency user and publicly visible transactions.
If others know that you own cryptocurrencies or other digital assets, or that you use certain software or hardware wallets, you are more likely to be targeted for theft or hacking. You may not want your ISP to know that you are connecting to a cryptocurrency exchange or even that you have a habit of checking cryptocurrency prices. You may not want a cryptocurrency exchange to know which country you are in, or information about your IP address or location.
Because it is unpredictable what laws and restrictions may apply to cryptocurrencies in various jurisdictions in the future, some cryptocurrency owners may be reluctant to share more transaction information than they need to.
Cryptocurrency users who value their privacy are advised to use a VPN when accessing cryptocurrency-related websites or services.
How much privacy does a VPN provide?
While VPNs offer more privacy from your ISP and the service you use, the VPN service provider will still keep logs that can identify where you are connecting from. (If you pay for a VPN provider’s services, they will likely keep additional personal information about you as well.) There may also be logging on the VPN provider’s machines that capture your destination address (for example, unencrypted website URLs may be logged by the VPN provider). So while VPNs don’t offer complete privacy, they do reduce the number of people who can analyze your Internet traffic.
Enhanced privacy doesn’t mean complete anonymity. If you use a VPN to log into a website with an account linked to your contact information, the site will still be able to tell that you are who you are, even if they can’t tell where you are.
How to Choose VPN Software
Here are some things to consider when deciding which VPN service to use:
- In general, avoid free services provided by commercial companies. They are making money somehow. (Open source software can be great and free because it avoids the conflict of interest of having to make money.)
- Look for a VPN provider that demonstrates respect for your privacy. They should be transparent about any logging they do and state that they do not resell their customers’ personal information.
- Look for a VPN provider based in a country with strict privacy laws, such as Switzerland (with ProtonVPN), Panama (with NordVPN), or the British Virgin Islands (with ExpressVPN and SurfShark).
- Don’t rule out VPN providers from countries with “stronger than average” privacy laws and a strong commitment to protecting user privacy (e.g. MullvadVPN).
- Your VPN provider should offer VPN connection servers hosted in the location where you want to appear.
- Make sure your VPN provider supports the device platforms you need.
- A VPN provider should be able to state that it has undergone an independent security and privacy audit from a respected security organization in the industry.
- This would be a nice feature if you could accept payments in cryptocurrency (if you could accept payments in cryptocurrency, you wouldn’t have to share as much information about your identity).
Popular VPN providers include ProtonVPN, NordVPN, and ExpressVPN.
Here are two specialized sites that provide independent reviews of VPN software:
And here are some popular user forums that can give you good advice:
Limitations of VPN Use
There are also some drawbacks.
Using a VPN may slow down your connection.
Some online services may block your access if they detect that your IP address is connected to a VPN. You may be able to bypass the block by connecting to another server in your VPN provider’s fleet, or you may not… “VPN blocking” can sometimes be inconvenient.
Some governments take steps to completely block VPN use in order to limit communication and privacy. This makes it much harder to use VPNs in some countries around the world. The legality of using VPNs in countries that prohibit or otherwise prohibit VPN use is something you should carefully research and consider if you find yourself in that situation.
A VPN won’t protect your device from malware. That’s not what a VPN is for. You are still responsible for following all guidelines for reasonable Internet security.
Websites can still leave cookies and other personal information-related crumbs on your local computer. To further enhance your privacy, you should clear your browsing history after your online activity.
Even if a VPN provider claims to limit the logging of user traffic, they may be required to provide traffic logs if they receive a court order.
Like any other company, VPN providers can be hacked or have data breaches. If a VPN provider’s access logs are inadvertently published, information about you can be leaked. This has happened to several VPN providers, including LimeVPN and UFOVPN.
Other forms of VPN
Instead of running traditional VPN provider software on your laptop or mobile device, you can install a VPN client in other forms, such as on a wireless Internet router, but setting this up can be tricky and inconvenient.
There are also browser extension VPNs that only protect data transmitted through specific browsers, but many people find these partial VPN tools too limited in scope.
There are also new types of decentralized open source VPNs entering the market, such as Mysterium. These VPNs offer interesting technology, but they don’t yet have a large user base or a long track record like traditional VPNs, and they’re not yet user friendly.
VPN Alternatives
Apple has announced that iOS 15 will bring a new privacy tool to iCloud users in the form of a Safari browser feature called Private Relay. It’s not a VPN, but it does add a layer of encryption and mask your IP address (but it won’t bypass geoblocking controls, so you can’t pretend to be in a different location).
Cloudflare offers a VPN alternative called “1.1.1.1 Warp”. This service acts as a DNS resolver that hides the Internet-based services you are connecting to from your Internet Service Provider. However, the services you are connecting to will still be able to see your real IP address.
Or you can use an open source peer-to-peer browser like Tor. Tor is not a VPN, but the Tor network breaks your data into smaller pieces and routes them individually through nodes that anyone can run, making it nearly impossible to piece together who did what. Tor traffic can be very slow and is more likely to be blocked by service providers than a standard VPN.
When you need to activate VPN
Almost all encryption-related websites and Internet services already offer a high level of security by protecting your data “in flight” with HTTPS/TLS encryption, but you may not want the websites you’re connecting to to know your location or IP address, or you may not want your ISP to know your online habits. If you want to add an extra layer of security and privacy to your encrypted activities, using a VPN can help.
Some people keep their VPN tunnel active all the time and only temporarily disable it when they find that they cannot use a particular service. Others activate their VPN only before connecting to a cryptocurrency exchange where they want to trade cryptocurrencies. As with many things in crypto, the choice is yours, but having a VPN and knowing how to use it will allow you to make an informed and appropriate decision. As you gain experience using a VPN, you will be able to activate it when you feel it is prudent.