What Is a Virtual Private Network (VPN)? Definition, Components, Types, Functions, and Best Practices

A virtual private network (VPN) is defined as a computer network that provides online privacy by creating an encrypted connection on the Internet. This article explains what VPN is and how it works, along with its components, types, functions, and best practices for 2021.

Table of Contents

• What Is a Virtual Private Network (VPN)?
• Advantages and Disadvantages of Using VPN
• Types of VPNs
• Key Functionalities of a VPN
• Top 15 Best Practices for Using and Managing a Virtual Private Network (VPN) in 2021

What Is a Virtual Private Network (VPN)?

A virtual private network (VPN) is a computer network that provides online privacy by creating an encrypted connection on the Internet. 

The security of personal data and activities while using the Internet has always been a matter of concern. It is precisely to address this pain point that the concept of virtual private networks came about. The ambit of the technology gradually grew to accommodate the needs of businesses and corporates of varying sizes. 

A virtual private network is a computer network that gives online privacy to a user by creating an encrypted connection from a device to a network. It uses tunneling protocols to encrypt sensitive data from a sender, transmit it, and then decrypt it at the receiver’s end. 

Because the user’s internet protocol (IP) address is masked and untraceable during this process, it provides a high level of privacy. The most common use of VPN technology is keeping all online recreational activities of an individual untraceable, even when accessed on a private Wi-Fi network. 

When used for businesses, a VPN only allows authorized personnel to access data of the organization through the Internet. With the help of a VPN, an organization with multiple offices globally can share its data with its employees, irrespective of location. This can be safely done because their IP addresses are masked, even while accessing public Wi-Fi networks. VPN significantly reduces the threat of cyber-attacks and security breaches. 

A 2019 report by Knowledge Sourcing Intelligence LLP projected a CAGR growth rate of 6.39% to touch USD50.153 billion by 2024 for VPNs. The increased demand will be fueled by the need to protect against cyber-crime-related issues. Another study conducted by the University of MarylandOpens a new window concluded that hacker attacks happen at a frequency of every 39 seconds. 

The CyberEdge Group 2020 Cyberthreat Defense Report revealed that 80.7% of organizations in seven major sectors had been affected by at least one successful cyberattack in 2020. VPN usage and data privacy are strongly interrelated. With VPNs making use of a separate server for Internet usage, hackers and cybercriminals can effectively be kept at bay.

How does VPN work? Put simply, VPNs work in three steps: 

1. The service encrypts the data that you are sending out. 
2. The data is placed in a secure capsule and sent through a private tunnel created on the Internet that masks the origin IP address. 
3. The receiving address gets the capsules and decrypts the information without seeing the origin address. 

When the Internet was conceptualized, the primary idea was to send data from point A to point B in an efficient manner. This was achieved by moving data on the IP, which has rules on how data must move between these points. 

Computer servers facilitated this over long distances, and if one failed, another would instantly take up the job. Transmission, rather than security, was the primary concern then and even today. This means that the Internet, for all practical purposes, remains a relatively insecure set-up. 

A VPN gives you the security you need while harnessing the power of the Internet.

Advantages and Disadvantages of Using VPN

In an article in Computer World (1997), author Bob Wallace told Tom Nolle, chief strategist at ExperiaSphere and president at CIMI Corp, that VPNs would let companies close ranks with suppliers, business partners, and remote sites around the world, and support growing legions of remote workers. Those predictions have come true to a large extent. Let’s look at the advantages of a VPN. 

1. Enhanced security: The fundamental functioning of a VPN strengthens the security of network traffic. It keeps all communication between remotely-located employees safe from the cybercriminals, without disturbing the flow of work. A VPN uses a range of encryption technologies like IP security (IPSec), layer 2 tunneling protocol (L2TP)/IPSec, as well as secure sockets layer (SSL) and transport layer security (TLS). All of these come together to create the tunnel through which encrypted data is passed from origin to destination points via a server.
2. Bypass geo-restrictions: Particularly in the case of personal use of a VPN, geo-restrictions can be bypassed to gain access to sites. The case in point being the scramble to access Netflix from other regions. VPN also helps to bypass censorship impositions in case of restricted sites while traveling. However, this access can be blocked if the need arises.
3. Anonymous downloads: Torrents, while usually associated with piracy, have several legitimate uses as well. Despite this, accessing Torrents can put you in trouble. VPNs can be used for access in such cases, provided they are for legitimate causes. There are still chances of your IP address being revealed by dubious service providers.
4. Easy file sharing: VPNs pave the way for large networks to provide easy access to the information within a private network. It makes the management of multiple remote locations and employees easier, with access that is similar to a local intra-network. This process needs a large bandwidth. However, internet service providers (ISPs) often resort to bandwidth and data throttling to boost the Internet speed of other customers; that is, they place a cap on the amount of data and bandwidth used. VPN helps bypass these caps. 

Now, let’s look at some disadvantages of using a VPN.

1. Speed issues: The stronger the encryption for a VPN, the slower it becomes. This especially holds true for free VPN providers (which come with several other negative points). However, paid services can deliver good levels of encryption at decent speeds. There are several ways to boost speed, for instance, reducing the distance between the device and the VPN server location. Also, upgrading to the necessary number of servers that can take the load of a large number of people using it makes a huge difference.
2. Increased network complexity: If you require a high-quality VPN, the network that needs to be set up will be more complex. This comprises several network topologies, protocols as well as hardware devices. The complexity can take a while for users to understand.
3. Security issues: Businesses use VPNs for the primary reason of giving data access to the employees working remotely. The security of the company’s network is then based on the number of users, their devices, and their access points, which reduces control of the VPN. 

This can happen in many ways, including:

• Logging policies: If your service provider maintains logs of browsing activities, then using them to hide your activities online becomes pointless.
• Data leaks: Despite the secure tunnel through which your data goes, there is a chance of leakage. Classic examples are IP leaks, DNS leaks, and WebRTCLeaks. 
• Fine print: If you don’t look through privacy policies, you may not know that you have signed up for user data to be shared with third parties, usually advertisers. 
• Faulty configuration: Bad configuration of your requirements can be dangerous to your network and data. 
• Malware: There are chances of malware being downloaded along with the VPN client, and this can give hackers and spammers access to your data. 

These pointers can also be used as a checklist when shortlisting VPN providers.

Types of VPNs

To find the right VPN for your business or even personal use, you must first determine what you need. The various types of VPNs include:

Types of VPNs

1. Remote access VPNs

Businesses utilize remote-access VPNs to create a secure connection between corporate networks and personal or company devices used by remote employees. Once connected, employees can access information on the company network in the same way they would if their devices were physically plugged in on office premises.

2. Site-to-site VPNs

Site-to-site VPNs are ideal for enterprises and businesses. They provide the ability to access and share information with a number of users based in several fixed locations.

Site-to-site VPNs are used in large-scale businesses where a multi-departmental exchange of information needs to be carried out securely and continuously. Such VPNs are not easily implemented and require a great deal of specialized equipment and complex hardware and resources. These VPNs are custom-built and may not come with the flexibility that commercial VPN services offer. Within site-to-site networks are:

•  Intranet-based site-to-site VPNs 

Intranet-based site-to-site VPN connects an organization’s own networks. For instance, if a company has its headquarters in Germany and wants to set up an office in Australia. Employees in both locations will want to collaborate during the process. So, a site-to-site VPN will connect the German office local area networks (LANs) to the same wide area network (WAN) as that of Australia, and share information securely. This is an example of an intranet-based site-to-site VPN.

•  Extranet VPN site-to-site VPNs

Extranet-based VPNs serve as a connection between two intranets that need to be connected but don’t have a way of accessing each other. If two different companies want to collaborate on a project, an extranet-based VPN will be used.

3. Client-based VPNs

Client-based VPNs allow users to be connected to a remote network through an application/client that manages the connection and the communication process of the VPN. For a safe connection, the software is launched and authenticated with a username and password. An encrypted link is then established between the device and the remote network.

Client-based VPNs allow users to connect their computers or mobile devices to a secure network. It’s a great option for employees to access their company’s sensitive information while working from home or a hotel.

4. Network-based VPNs

Network-based VPNs are virtual private networks that securely connect two networks over an unsafe network. An IPsec-based WAN is an example of a network-based VPN. In this VPN, all offices of a business are connected with IPsec tunnels on the Internet. 

The three common types of network VPNs include: 

• IPsec tunnels: This type of approach establishes a tunnel to exchange the data between two networks in an encrypted form. IPSec tunnels can also be used to encapsulate the traffic for a single device.
• Dynamic multipoint VPNs (DMVPN): This type of approach allows IPsec point-to-point tunnels in a cloud of connected networks. DMVPN allows any two networks to communicate directly across the DMVPN cloud.
• MPLS-based L3VPNs: Multiprotocol label switched (MPLS) networks allow virtualization of networks so that users can share physical networks while staying logically separate. 

Key Functionalities of a VPN

VPNs primarily help secure communications and data transfer. There are many other functionalities of this technology. 

1. Enhanced security

The basic functionality of a VPN is keeping data secure and encrypted from hackers. The current pandemic has resulted in a large-scale work from home (WFH) scenario across the globe, and consequently, global investments in security have been on the rise.

In merely 24 hours, Microsoft found a massive phishing campaign using 2,300 different web pages attached to messages. These messages were in the form of COVID-19 financial compensation information. The result was a fake Office 365 sign-in page. A global forecast report by MarketsandMarkets on cybersecurity, pre-COVID, showed that the market was set to grow at a CAGR of 10.2% between 2018 and 2023. This figure, experts say, is soaring during the pandemic. 

2. Remote control

Remote working was never as important as it is today. A Gartner reportOpens a new window reveals that organizations should expect 75% of their staff to expand their remote work hours by 35% in late 2020. VPNs can be accessed remotely, no matter where the employee is based, and safely too. The productivity of a company, therefore, remains steady and even improves as file sharing becomes safer.

3. Better performance and lower costs

When choosing to invest in VPNs, it is important to understand that the initial investment is almost always an affordable one, no matter the size of your business and the features you require. If you crunch the numbers, you will see that more companies are inclined to let their employees work from home. The VPN solution can also be scaled to the growing size of your business. 

As a technology, VPN lends itself to enhance the bottom line of any business, primarily ensuring business continuity. It then provides a safe environment that is easily accessible by remote workers, irrespective of where they are located. 

Top 15 Best Practices for Using and Managing a Virtual Private Network (VPN) in 2021

The demand for VPNs has always been steadily increasing. A 2020 Top10VPN survey found that there is an increase of 41% in global VPN demand. And that this demand remains 22% higher than it was at pre-pandemic levels. With such an increase in demand, businesses need to know how to use their VPN and manage it efficiently. There are multiple levels on which this has to be approached.

VPNs do come with their sets of vulnerabilities. The important thing is to ensure that you have measures in place that prevent these vulnerabilities from being exploited. Here’s what an organization needs to do:

1. Use the strongest authentication for access

There are four leading authentication solutions that you can consider — ID Control USB Token, OTP Key, CardID, HandyID, MessageID, and KeystrokeID. With each of these, you have several secure options to authenticate access to your VPN. Your service provider will be able to help you choose the best one. 

2. Use the strongest encryption protocols

The use of encryption protocol depends on the network infrastructure. Popular ones include the following.

• Internet key exchange (IKEv2) is among the oldest but highly ranked in terms of security protocols. It utilizes IPSec tunneling along with a number of encryption protocols such as AES-256 encryption, which is hard to bypass. It also uses certificate-based authentication and uses the HMAC algorithm for verification of the transmitted data’s integrity. 
• Secure socket tunneling protocol (SSTP) by Microsoft offers limited support because it is largely supported on Windows. 
• OpenVPN is a popular open suite of protocols, enabling multiple sources to check for vulnerability. 
• Software ethernet (SoftEther) is the latest on the block and is open-source as well. It can be placed on any operating system — Windows, Mac, Android, iOS, Linux, and even Unix.

3. Limit VPN access

Access to the VPN must be limited because it provides a gateway to your company’s LAN network. For safety, companies should advise their employees to open it only when needed and not leave it open all day. It should also not be used to download any files that are commonly used by multiple departments. 

4. Select files can be accessed via intranets

Using intranets or extranets rather than VPNs, with an HTTP secure (HTTPS) website and safe password for a certain selection of files will only expose the files on a server, and not the network. This works better when combined with the use of a VPN. 

5. Allow email access without a VPN

When sending emails, it is ideal to enable three main protocols: post office protocol 3 (POP3) to receive emails, Internet message access protocol (IMAP) to receive emails, and simple mail transfer protocol (SMTP) for sending emails. Once that’s done, you will only need secure password authentication (SPA) and SSL encryption to enhance the mail system security.

6. Use strong antiviruses and firewalls

Since any computer connected to the VPN can be susceptible to viruses, it is important to use strong antivirus software and anti-spam and firewalls for all remote users.

7. Secure all remote wireless networks

With a larger number of employees now working from home, the use of laptops and personal devices has increased, potentially increasing threats. As wireless routers are not very secure, companies should encourage employees to configure their wireless routers as well as computers for wi-fi protected access (WPA) with a pre-shared key, as well as their firewalls.

8. Specify devices to be connected through a VPN

Companies and their IT departments can issue rules that mandate only company-issued hardware to connect to corporate networks internally, with or without a VPN. As an add-on, employees should not be able to load any organizational software on their devices without admin approval. 

Such rules help protect against distributed denial of service (DDoS) attacks, where a single user can end up infecting an entire network. Secure usage and maintenance of VPN networks is a collective effort. While companies do their part, employees also need to implement best practices to ensure security.

9. Use bandwidth wisely

Employees have to be advised that VPN comes with a specific amount of bandwidth, as per the company’s usage. They should refrain from using it for personal needs, such as watching a live streaming site or a personal online video chat. 

10. Restrict download of the VPN profile

Employees should use VPNs only on their work devices and ensure limited usage. When necessary, companies should remind employees that although a VPN may protect personal use from public eyes, it is still visible to employers. 

11. Understand that not all VPN providers are great

In the remote chance that employees decide to get a VPN connection of their own, dissuade them from it. Free VPN providers don’t offer as many features as enterprise VPN providers. Such providers may end up doing more harm than good. 

A company’s IT team battles a barrage of technical problems, VPN security being just one of them. Nevertheless, its importance cannot be overlooked. Here are a few practices that should be on the top of their minds. 

12. Identify stolen credentials

Account credential risk is a real thing. VPNs use a traditional username and password combination, which can be guessed and stolen. Strict deadlines should be put in place for IT teams to re-evaluate and upgrade authentication tools that are being used by the organization. 

13. Ensure VPN capacity

With whole organizations, or even a large percentage of them working remotely, upgrading the VPN to accommodate them all is necessary. This can work out to be an expensive affair considering the additional licenses that have to be procured and so this has to be done with some planning. 

14. Look for unusual user access

IT teams will have to be on the constant lookout to ensure there is no unusual user access to the key being utilized. If this necessitates more security controls for authorized user access, then it should be implemented. 

15. Maintain employee machine patches

In larger organizations, it is common to have employees put on to the LAN or VPN to patch their computers. The IT department must maintain a regular check on computers that need patching, particularly if the computer is not being used regularly. Irregular usage can leave it vulnerable to attacks.

The way businesses operate today has turned dynamic, and their needs in terms of security and ensuring business continuity need to be constantly upgraded to keep pace. VPNs ensure great levels of security for businesses if used well. 

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