Why Use a Proxy Server? Benefits, Drawbacks and Common Use Cases

When proxy servers first hit the internet scene in the early 1990s, they had a relatively simple function: caching frequently accessed web pages to speed up load times.

Proxy servers still serve that function for some corporations today, but their use has expanded extensively into web scraping, market research and content filtering applications.

A proxy server essentially acts as a middleman between your device and the destination it’s trying to reach. Instead of going directly to a web page, for instance, your request is rerouted through a separate server with a different IP address, acting as a “proxy” for your request. 

This is similar to a virtual private network, or VPN, which also sends your traffic through a separate server before reaching its destination. A proxy server doesn’t encrypt your traffic along the way.

But what it lacks in privacy, it makes up for in options: The best proxy servers have pools of hundreds of millions of IP addresses worldwide, allowing you to collect large volumes of data from websites without getting blocked.

How a proxy server works

A proxy server essentially acts as a middleman between your device and the internet. Instead of connecting your device directly to a website, your request goes through the proxy server before reaching its end destination. The response from the website is then routed through the proxy server again on its way back to your device.

“It’s an intermediary,” said Erik Avakian, a technical counselor at Info-Tech Research Group and the former chief information security officer for the Commonwealth of Pennsylvania. “It's coming from somewhere else, so the person's source IP is protected.”

The key function of a proxy server is that the site’s web server doesn’t see your IP address -- it sees the proxy server’s. This can work both ways: Proxy servers can also act as a filter for requests coming into your network. 

From a user’s perspective, using a proxy server shouldn’t feel all that different from accessing a web page without one. That said, using a proxy server can slow down website access, as requests have to travel through an intermediary server. 

Here’s a step-by-step rundown of what happens when you connect to a proxy server:

1. A request travels from your device to the proxy server.
2. This request is forwarded from the proxy server to the website’s server.
3. The website receives the response and sends it back to the proxy server.
4. The proxy server delivers the data back to you.

Sounds simple enough, right? While the mechanics of proxy servers are fairly straightforward, there are a number of nuances when it comes to the type of proxy server you need, what you’ll be using it for and potential risks and limitations. 

The benefits of using a proxy server

Using a proxy server can have a number of benefits for both individual users and businesses. In this section, we’ll cover some of the most common use cases for proxy servers and which types of proxies are most effective for each one.

Web scraping

Web scraping is by far the most common use case for proxy servers. When companies conduct competitive research or data collection, their requests are typically denied by websites when they’re all coming from a single IP address.

Proxy servers allow businesses to avoid IP bans and rate-limiting mechanisms that limit the number of requests a user can make in a specific time period. With a proxy server, you have access to millions of IP addresses around the world, which also allows you to target localized data in specific markets.

In our proxy server testing, Oxylabs had the largest residential proxy pool we saw, with more than 175 million IP addresses available. 

Content filtering

Proxy servers can be incredibly useful for businesses looking to block harmful content from entering its systems, or even just to restrict employees from accessing social media sites on a corporate network.

This can be especially effective for blocking sites known to contain malware or other malicious content, such as phishing attacks. Individuals can also use content filtering features on proxy servers to restrict which types of websites are accessible on their home network. 

Geo-targeting and market research

For businesses that are looking to collect localized data, proxy servers are an essential tool in their toolbox.

When I reviewed Decodo’s proxy servers, I was impressed by its range of locations that I could choose from. In the US alone, I was even able to pick out specific ZIP codes in the US where I could access one of its proxy servers. 

If you wanted to do market research on a business like auto insurance, for instance, where rates are affected by location, a proxy server would allow you to collect data in a number of different areas. 

Performance and bandwidth

Proxy servers are often used by businesses to improve network performance. This is primarily done by caching frequently accessed content. Proxies can store this data locally, which allows multiple users to retrieve it more quickly.  

Another key performance feature is load balancing. This allows businesses to spread traffic across multiple backend servers rather than directing it all through a single one. This also gives businesses a mitigation strategy against site shutdowns, as traffic will have multiple servers to go through in the event of a network outage.  

When a proxy server is not a good idea

Proxy servers have a lot of helpful applications, but they’re not always the best choice for every situation. In this section, we’ll cover some of the use cases where proxy servers aren’t always the best option. 

VPNs are generally a better choice for individuals

For individual users looking to strengthen their privacy, a VPN is often the better choice. The main reason for this is that proxy servers don’t encrypt your traffic -- they simply route it through a separate IP address. VPNs also do this, but they also encrypt your data in the process, which adds another layer of privacy. 

VPNs are also much simpler to use. Connecting to a proxy server involves accessing your device's network settings and using a setup script or a configuration file, while a VPN is as simple as downloading an app and choosing the server you want to connect to.

VPNs still allow you to access geo-restricted content, but they won’t give you the same large pools of IP addresses that can handle thousands of requests. That probably won’t matter much to an individual user, but it can be a dealbreaker for businesses looking to do large-scale web scraping. 

High-speed, low-latency needs

While reverse proxy servers can improve a business’s network performance through content caching and load balancing, the same isn’t necessarily true for an individual using a traditional forward proxy.

When I tested proxy servers for CNET, many of them returned download speeds below 5Mbps with ultrahigh latency. That’s because you’re adding a layover on the traffic’s journey -- one that’s often halfway around the world, depending on the location of the proxy server you choose.

This makes most proxy servers untenable for activities like online gaming that require low latency. In these situations, you’re better off choosing a VPN that’s optimized for gaming. 

Free proxy servers

Free proxy servers sound too good to be true -- and they pretty much are. You can find a number of free proxy lists online, but they are generally slow, unstable and unlikely to stay up for very long.

More importantly, they’re quick to be blocked by most sites, as you’ll be sharing them with a number of other users. For web scraping purposes, this makes them functionally unusable. 

Alternative options to using a proxy server

Depending on your needs, a proxy server might not be the best solution. A VPN or a Tor browser is usually a better option for individual use cases, while a proxy server is better suited for business applications like web scraping and market research.

VPN: Best for ease of use, geo-blocked video streaming, and online gaming.

As we discussed above, a VPN is a better choice for privacy and ease of use. Unlike proxies, you’ll pay a monthly subscription fee rather than by the amount of data you use.

The main benefit of a VPN is that your data is encrypted. This theoretically slows down your internet connection, but CNET’s testing found that the fastest VPNs kept speed loss to around 25% or less. You can even install them directly on many Wi-Fi routers so that all of your traffic goes through the VPN. 

Tor: A free service best for decentralized anonymity 

Tor is a free, open-source software that sends your traffic through a network of volunteer-run servers across the world. Like with a proxy server, when you access a website through a Tor browser, it sends your request through three randomly selected Tor servers, or nodes: an entry, middle and exit.

The main downside is that Tor is slower than both VPNs and proxy servers, as the traffic has to travel through three servers instead of a single one. You probably won’t be able to get a fast enough connection to stream video in HD or above, and don’t even think about online gaming. 

Potential risks and limitations of using a proxy server 

As VPNs have become more widely adopted, proxy servers have evolved into more of a business product. While they can be excellent tools for tasks such as web scraping and content filtering, they also have downsides. 

Unethical proxy sourcing

Not all companies selling proxy servers are reputable. When researching proxy servers, it’s important to look into how their IP addresses are sourced.

A trustworthy proxy company should provide a detailed explanation of how it acquires its proxies. At a minimum, people or businesses should be aware that their IP addresses are being used, give their explicit consent and be compensated for it.

In January this year, Google took legal action to take down one proxy network with millions of IPs that it says was “leveraged by a wide array of bad actors.”

Speed limitations

Theoretically, proxy servers shouldn’t slow down your internet connection as much as a VPN since they’re not encrypting your traffic. But when I tested proxy servers, many returned download speeds as low as 1Mbps.

That’s not to say all proxy server connections will be that slow, but you might run into issues if you’re trying to stream or play online games through a proxy.

Potential terms of service violations

I’m in no position to give legal advice here, but I’ve learned that using a proxy server is generally not illegal. But some activities may violate a website’s terms of service.

There have been a number of legal cases surrounding web scraping -- Reddit filed a lawsuit last year against AI search developer Perplexity over the practice.

"Web scrapers and those who host or rely on scraped personal data also should be aware of all applicable privacy regulations governing their activity and seek legal advice to ensure that they are complying with these regulations," says a post from the law firm Quinn Emanuel on the topic.

If you’re not sure about whether using a proxy server for web scraping violates a site’s copyright policy, consult an attorney to make sure you’re in compliance. 

Types of proxy servers

When you start shopping around for proxy servers, you’ll see a dizzying array of options. Do you need a forward or reverse proxy? Do you want the proxy server to use a residential or mobile IP? What does it mean to share a proxy with other users rather than having one all to yourself?

In this section, we’ll cover some of the finer points on proxy server types and their use cases.

Forward vs reverse proxies

When you hear the term “proxy server,” it’s almost always referring to forward proxies. A forward proxy receives outgoing requests from your device and forwards them to their destination.

A reverse proxy, on the other hand, protects incoming requests to your network by filtering them through the proxy server. Instead of taking requests from a single device, it handles requests for an entire server. 

“Corporate environments that have websites don't want those IP addresses exposed, so they'll have a reverse proxy at the front end of that so that the source that's trying to get to those servers is not going to see the server address,” said Avakian. 

Reverse proxies are also used by companies to improve network performance through load balancing and content caching, or to restrict access to specific websites on employees’ devices.

Residential, mobile, datacenter and ISP proxies

Companies selling proxy servers offer a copious amount of customization options, and most of them come down to which type of server you want the proxy to be. Here are some of the main options you’ll see:

• Residential: These proxy servers use IP addresses issued by internet service providers, or ISPs, appearing to the end destination as regular internet users. They’re viewed as highly legitimate by websites and are less likely to be blocked by anti-bot mechanisms.
• Mobile: The most valuable type of proxy server, and the most expensive, is mobile proxies, which use devices connected to wireless carriers. They’re generally used to target sophisticated websites, such as social media platforms.
• Datacenter: Rather than use real users' IPs, datacenter proxies exist on servers owned by web hosting companies like AWS and Google Cloud. They’re the cheapest proxy type out there, but also the most likely to be blocked. 
• ISP: Sometimes called “static residential” proxies, ISP proxies fall somewhere between residential datacenter proxy servers. These are owned by ISPs, but instead of running on end users’ devices, they’re hosted in data centers. 

Shared vs dedicated

Most proxy companies offer options for both shared and dedicated IPs. Shared proxy servers allow multiple customers to use the same IP addresses at the same time, while you’ll have dedicated proxies all to yourself.

Performance is generally slower with shared proxies, and you risk encountering bad neighbors that cause your IPs to be blocked by specific websites. As expected, you’ll pay more for dedicated proxies. 

The bottom line

There are plenty of good reasons to use a proxy server -- and plenty not to. In general, they’re most useful for businesses looking to conduct large-scale web scraping without being blocked by a website’s anti-bot detection mechanisms.

Reverse proxies are commonly used by companies that want to protect their employees from malware or filter the content they can access.

For individuals who just want some privacy, a VPN or a Tor browser is almost always a simpler and more effective option.