VPS vs. VPN: What’s the difference?

VPS (Virtual Private Server) and VPN (Virtual Private Network) might sound similar—they both involve servers and have “virtual” in their names. But in reality, they serve completely different purposes.

A VPS is a remote server that businesses and individuals typically use for hosting websites, applications, or other online services. A VPN is cybersecurity software that encrypts your internet connection and changes your IP address, preventing outsiders from intercepting your data or deducing your physical location.

Still unsure which one you need—or whether you need both? This guide breaks down all the important VPS vs. VPN differences, including their benefits and best use cases to help you decide.

VPS vs. VPN: A side-by-side comparison

Choosing between a VPS and a VPN depends on what you need—one is designed for web hosting, while the other is built for securing your internet connection. Let’s break down their key differences.

Key differences between a VPS and a VPN

A VPS is a private, virtual server that acts like a dedicated machine for hosting websites, applications, or other online services. It gives you full control over the server environment, offering customization, scalability, and dedicated resources without the cost of a physical server.

A VPN, on the other hand, is cybersecurity software that encrypts your internet connection and reroutes your traffic through a remote server. The encryption makes it close to impossible for third parties like ISPs, cybercriminals, and Wi-Fi owners to decipher your data. The remote VPN server masks your real IP address with its own to keep your identity and general location private.

While both involve virtual servers, their use cases are entirely different—you can use a VPS to host an application or store information online, while you can use a VPN to improve your online privacy and security.

Which one is right for you?

The right choice depends on your needs:

• A VPS is the best option if you need a private hosting solution for a website, online project, or business application. It provides dedicated resources, customization, and better performance compared to shared hosting options.
• A VPN is the best option if you need to secure your internet connection, protect your privacy, or access content from a restricted network or that is only available in a different location. A VPN encrypts your data, changes your IP address, and prevents ISPs, hackers, and other third parties from tracking your online activity.
• Some people may benefit from using both—for example, if you run a business website on a VPS but also want to secure your online activity, using a VPN alongside it would be beneficial.

VPS vs. VPN: Comparison table

What is a VPS?

A Virtual Private Server is a type of web hosting service that provides people with a private, dedicated portion of a physical server. Traditionally, organizations used physical servers to store data and process information requests. However, companies running only a website or two didn’t require the resources that an entire server offered. This gave rise to shared hosting services where websites and applications from multiple customers are hosted on the same server.

The VPS concept is an evolution of that and offers more control, power, and flexibility than regular shared hosting. This makes it a popular choice for businesses, developers, and website owners who need reliable performance. Unlike shared hosting, where multiple customers share the same server resources, a VPS creates a separate space for each user and allocates dedicated CPU, RAM, and storage to them. This ensures better security, stability, and scalability than traditional shared hosting.

How a Virtual Private Server works

A VPS is created by splitting a physical server into multiple virtual servers using virtualization software (known as a hypervisor). Each virtual server shares a portion of the physical server’s CPU, RAM, and hard disk yet operates completely separately from one another. The virtual servers can run independent operating systems, applications, and configurations.

This setup lets users:

• Install and configure software as they would on a dedicated server.
• Scale resources up or down based on their needs.
• Maintain higher performance and security than with shared hosting.
• Ensure better server stability and consistent access to the data on the server.

What is a VPS used for?

A VPS is a versatile web hosting solution used for a wide range of applications, including:

• Website Hosting. Ideal for businesses, e-commerce stores, and blogs needing a stable, scalable hosting solution.
• Application Hosting. Supports web apps, APIs, and software that require dedicated resources.
• Gaming Servers. Used to host multiplayer game servers for lower latency and better performance.
• Business & Enterprise Solutions. Many businesses use a VPS for data storage, email servers, or cloud-based applications.
• Testing & Development. Developers use VPS environments to test software, run scripts, and manage code without affecting production servers.

The benefits of using a VPS

VPS hosting is a great choice for anyone who requires more space and flexibility than shared servers offer but isn’t ready for the technical demands and extra costs of a dedicated server.

Some of the most significant advantages of VPS hosting include:

Enhanced performance

A VPS can provide fast load times and good connection stability since your virtual environment does not share server resources with other environments. This means your website or application can handle more traffic without slowdowns compared to shared hosting.

More customization and control

A VPS lets you install your own operating system, software, and configurations, giving you full control over your hosting environment without needing to consult the hosting service. This is particularly useful for developers, businesses, and advanced users who need a flexible setup.

Better security compared to shared hosting

Your data and applications are isolated from other users on the same physical server, reducing the risk of security vulnerabilities common in shared hosting environments. You can also implement your own security measures, such as firewalls, encryption, and access controls instead of relying on the server host to manage those aspects for you.

Cost-effective alternative to dedicated hosting

A VPS offers many of the same benefits as a dedicated server without the high price tag, making it a cost-effective choice for businesses that need scalability and control without paying for an entire physical server.

The drawbacks of using a VPS

Despite the many advantages, there are a few disadvantages to VPS hosting. Depending on your needs and goals, a VPS might not be what you need.

Requires technical knowledge

Setting up and managing a VPS can prove challenging if you’re new to the world of hosting and server upkeep. Unlike shared hosting, where most configurations are handled for you, a VPS often requires you to:

• Configure your own server settings
• Install security updates and patches
• Manage performance optimization

For beginners, a managed VPS (where the hosting provider handles maintenance and security) can be a good option, but it usually comes at an extra cost. Hiring a dedicated IT administrator can also keep the headaches at bay, but only if you can afford it.

More expensive than shared hosting

While a VPS is cheaper than a dedicated server, it costs more than shared hosting. Exact pricing depends on the resources you need (CPU, RAM, storage) and whether you choose a managed or unmanaged VPS.

What is a VPN?

A Virtual Private Network is an app that lets you route your traffic through a remote server. In the process, it encrypts your internet connection and replaces your IP address with the server’s IP address before directing your traffic to the web. This combination helps protect your online activity and personal data from hackers, ISPs, and other third parties.

By masking your IP address, a VPN makes it harder for websites and advertisers to track you and also lets you access content that may be unavailable in your location or on the network you’re using. Whether you’re concerned about privacy, security, or access restrictions, a VPN provides a solution to those needs.

How a Virtual Private Network works

A VPN works by creating a secure, encrypted tunnel between your device and the internet. Instead of connecting directly to websites or online services, the VPN software:

• Establishes a secure connection between the VPN app on your device and a VPN server, exchanging the unique encryption keys used to decipher encrypted data during this session.
• Encrypts your traffic using an algorithm that changes every bite of data you send to the VPN server, making it nearly impossible to decipher without the correct encryption keys.
• Routes your encrypted data through your regular ISP network to the VPN server.
• Masks your IP address with the server’s IP address so websites and services see the VPN server’s location and IP-associated information instead of yours.
• Forwards your data to the end destination—the web server of a website, application, or other online service.

When should you use a VPN?

A VPN is useful in various situations where privacy, security, or internet freedom is a concern. You should consider using a VPN to:

• Browse safely on public Wi-Fi. Protects against cybercriminals or snoopers who might try to intercept your data on unsecured or shared networks.
• Keep your online activity private. Stops ISPs, advertisers, and websites from tracking your browsing habits accurately.
• Access restricted content. Helps you regain access to content on restricted networks (at work, for example) and use streaming services, websites, and apps with no limitations.
• Bypass censorship. Helps people in restricted regions access information freely.
• Avoid ISP content-based throttling. Prevents internet slowdowns caused by ISPs monitoring and limiting specific types of traffic as your ISP can’t detect what you’re doing online.

The benefits of using a VPN

Using a VPN provides multiple benefits, from privacy and security to greater online freedom.

Improved online privacy

A VPN prevents websites, advertisers, and ISPs from accurately tracking your online activity. By masking your real IP address and encrypting your internet traffic, it helps to increase your anonymity and protects your sensitive information from being logged or sold.

Greater internet freedom

Streaming services, news websites, and social media platforms often change and restrict content based on your location. A VPN lets you connect to servers in different countries, making it appear as if you’re browsing from those regions. This way, you can safely tailor your online experience to fit your needs, such as when you’re traveling abroad and don’t want to miss out on a pop-up sale from an online store back home.

Enhanced security on public Wi-Fi

Public Wi-Fi networks, such as those in cafes, hotels, and airports, usually lack proper security, making them an easy target for cybercriminals. A VPN encrypts your connection, preventing cybercriminals from stealing sensitive data like passwords, credit card details, and personal messages—even if they’re on the same network.

Protection against ISP tracking & throttling

Some ISPs track their customers’ browsing activity and may slow down specific types of traffic, such as streaming or gaming, based on usage patterns. A VPN prevents your ISP from seeing what you do online, reducing the chances of them throttling your connection based on your activity.

The drawbacks of using a VPN

While a VPN offers significant advantages, it’s important to consider the potential downsides as well.

Slower speeds due to encryption

Because a VPN encrypts your internet traffic and routes it through a remote server, it can reduce your connection speed. However, a high-quality VPN service minimizes speed loss by offering fast and optimized servers worldwide.

Some services block VPN traffic

Certain websites, streaming platforms, and apps, such as banking services, actively detect and block VPN connections to avoid potential fraud or enforce restrictions. A reliable VPN can avoid most blocks, but you may occasionally need to switch VPN servers to find one that works.

Not a replacement for full system security

A VPN encrypts your internet traffic, but it doesn’t protect against viruses, malware, or phishing attacks. For comprehensive security, it’s essential to use a VPN alongside antivirus software, a strong firewall, and good cybersecurity practices.

VPS vs. VPN: Which one offers better security and performance?

They’re actually not competing choices. While both a VPS and a VPN involve virtual servers, they serve entirely different purposes. This makes it hard to compare whether a VPS vs. a VPN is the better choice. In terms of how they rank for security and performance in their respective applications, it depends on the service you choose and how you configure it.

Here’s a quick breakdown of what that means:

• A VPS is designed for hosting and can provide more reliable performance for websites, applications, and business needs than shared hosting options. However, it does not inherently encrypt data or protect user privacy while browsing. When using a VPS, you’re in control of managing your server environment’s security unless you choose a service that manages this for you.
• A VPN is designed to secure your internet connection with encryption, but it does not improve website or app performance. It may improve your connection speed or stability in some cases, such as by preventing content-based ISP throttling. Your experience in terms of security and performance will vary from one VPN provider to another.

When to use a VPS instead of a VPN

A VPS is the better choice if you need a reliable hosting solution for websites, applications, or business services. You should consider a VPS when:

• You need a customizable, scalable hosting solution. A VPS offers dedicated resources and control over software and configurations.
• You require better uptime and performance than shared hosting offers. Your site or app gets its own allocated resources, reducing slowdowns.
• You’re hosting business applications or databases. A VPS is commonly used for cloud storage, business email servers, and application hosting.

A VPS won’t protect your personal browsing or online identity, so if you’re looking for a personal privacy solution, a VPN is the better option.

When to use a VPN instead of a VPS

A VPN is the right choice when you’re looking to secure your internet connection and protect your privacy. You should use a VPN when:

• You want to keep your online activity private. A VPN encrypts your traffic and prevents ISPs, cybercriminals, and other third parties from tracking your browsing.
• You frequently use public Wi-Fi. A VPN secures your connection, preventing malicious hackers from intercepting your data.
• You need to bypass internet restrictions. A VPN lets you access web platforms that may be changed or limited by region, government censorship, or network firewalls.
• You want to stop content-based ISP throttling. ISPs often slow down certain types of traffic (like streaming or gaming); a VPN makes your online activity private, helping to maintain consistent speeds.

A VPN does not function as a hosting solution, so if your goal is to run a website, application, or online service, you’ll need a VPS instead.

Can you use a VPS as a VPN?

Yes, you can set up a VPS to function as a VPN server, but it requires technical knowledge and manual VPN configuration.

By installing VPN software on a VPS, you can create your own private VPN, which lets you:

• Encrypt your internet traffic without relying on a third-party VPN provider.
• Choose your own server location depending on where the VPS has servers available.
• Have full control over your VPN setup, including encryption protocols and logging policies.

However, setting up a VPN on a VPS comes with limitations:

• It requires manual setup and ongoing maintenance. Unlike commercial VPNs, a self-hosted VPN won’t automatically update or offer customer support.
• It won’t have a global network of servers. Commercial VPNs provide multiple server locations, letting you switch regions as much as you want, while a self-hosted VPN only routes traffic through your VPS.
• It may not offer the same level of privacy. If the VPS provider logs traffic or server data, your privacy could still be at risk.
• It could severely compromise your privacy and security if the VPN isn’t set up or maintained correctly.

For someone who wants a simple, reliable, and easy-to-use VPN solution, a commercial VPN is typically the better choice. However, a self-hosted VPN on a VPS can be an option for those with technical expertise and specific customization needs.

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Is a VPN better than a VPS?

A VPN and a VPS serve entirely different purposes, so one isn’t necessarily better than the other—it depends on what you need.

If you need privacy, encryption, and security while browsing the web, a VPN is the better choice.

If you need a scalable, reliable hosting solution for websites, applications, or online services, a VPS is the right option.

Some users may benefit from using both—for example, a business might host its website on a VPS while using a VPN to keep its internal communications private.

To help you decide, here’s a breakdown of how they compare in terms of security, performance, and cost.

Security & privacy comparison

A VPN is specifically designed for online privacy and security, making it the better option for protecting your personal data.

Performance & speed comparison

While a VPS is a good solution for web hosting, a VPN is the right choice for secure browsing. 

Cost & usability comparison

A VPN is simple to use, while a VPS requires more technical expertise but offers greater customization for hosting needs.

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