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How does a VPN work?

A straightforward breakdown of what a VPN, how it works, and why you might want one.

Nathan Lawrence
Mar 22, 2023
Icon Time To Read5 min read

These days, it’s becoming more and more important to have virtual private network (VPN) software. Given the popularity of big-name VPNs in Australia, including NordVPN and ExpressVPN, it’s no wonder that more and more Aussies are starting to seek out the best free VPNs or sign up to the best premium VPN services. But what exactly is a VPN and how do they work?

Let’s explore.

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What does VPN stand for?
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VPN is short for ‘virtual private network’. The ‘virtual’ part refers to the digital connection between device and VPN server. And the ‘private network’ bit refers to the reality it creates a secure network connection.

What is a VPN?

Before we get into the how, let’s first look at what a VPN is. VPNs are built to create a private network connection while using public internet. This is like the logic of your local network—the wired and wireless connections in your home—and the public network (the internet via a provider) that your local network connects to in order to get all of the connected devices on your local network online.

But a public network may also be a coffee shop, a friend’s local network or at a big event where hundreds or even thousands of people are connected to the same network. Using a VPN in any of these settings (including at home) helps to make your online activities virtually untraceable, protecting your privacy often via thousands of server options around the world.

How does a VPN work?

Local networks use private internet protocol (IP) addresses for your devices, usually automatically assigned by a router or modem-router, but a single public-facing IP address is used to connect a local network to the internet.

VPNs mask your public-facing IP address by redirecting internet traffic through a remote server that acts as a VPN host, assigning a new IP address to your device’s internet connection. As far as the internet is concerned, all of your internet usage via a VPN is coming from the VPN’s IP address rather than your own public IP address. Bottom line: providers and other online third parties can’t see what you’re doing.

How does a VPN cost?

VPN prices range from typically data-limited free trials to around $20 Australian per month. Note that it’s common for VPN services to charge in US dollars, so you may have to factor in currency conversion fees.

The best value for VPNs comes from subscribing to longer-term subscriptions. It’s common for VPN services to offer annual subscriptions, which range in price from about $60 per month to closer to $150. Some VPNs offer multi-year subscriptions for the best overall value, which start at around $100 for three years. VPN Unlimited offers a lifetime subscription. While the value of these plans tends to be advertised in terms of monthly cost, the price for annual and multi-year VPN subscriptions are paid in full upfront.

Check out the table below for a list of the best cheap VPNs (of the ones we’ve reviewed):

Cheapest price
Number of VPN servers
Simultaneous connections
$75.14 2-year plan
US$83.43 2-year plan for new visitors
83 countries
US$59.88 1-year plan
47 countries
AU$61.29 2-year plan
65 countries


US53.88 1-year plan
US$99.95 1-year plan

Data effective of last page update. Offers and availability may vary by location and are subject to change.

How does a VPN do to protect me?

We’ve explained what a VPN is, but here’s why you need one. A VPN connection first has to be established for a device to be protected. VPNs can be installed on individual devices—including computers, smart TVs and mobile devices—as well as at a local network level, as long as your router or modem-router supports this.

Used on an individual device, a VPN will mask the internet goings-on of that device only. If it’s activated at a local network level, whenever the VPN is active, all devices connected to the local network will have their online activities masked. A VPN can also be used to block intrusive or potentially dangerous online ads, too.

By masking your public IP address, a VPN effectively anonymises all of your internet activities as long as it’s connected. This means that your browsing history won’t be visible by your provider or other third parties. It may be less of a concern on your home internet connection, but because anyone can connect to a public WiFi hotspot, these sorts of connections can expose your devices to hackers, and a VPN effectively puts your devices in the ‘too hard’ basket because it’s not as easily accessible.

The best VPNs tend to use military-grade encryption to secure all of the data that runs through them whenever you’re connected to a VPN server. That covers everything you browse, download and any services that use the internet on a VPN-connected device. The VPNs that are best for privacy are headquartered in countries without data-sharing agreements. They also tend to have zero-log policies, which means they don’t store user data. Some even use RAM-only servers, which are incapable of storing details, including NordVPN, ExpressVPN, Surfshark VPN and Private Internet Access VPN.

How does a VPN work for Netflix and other streaming services?

VPNs have many uses, such as connecting to a very specific and authenticated work network from an outside network, but one of the more popular recent uses of VPNs is to access overseas streaming services and libraries that are normally geoblocked. Geoblocking is one of the ways that online services can protect licensing agreements for content that’s only intended to be accessible in certain regions.

With Netflix, for example, the library you have access to is determined by the region you’re connecting from. While certain titles are identical, Australia has a different Netflix library to America, Ireland and Malaysia (to name a few). Netflix uses your public IP address to determine which library you should have access to, which means if you’re traveling with a device, you’ll notice the library content changes based on the country you’re in.

A VPN can effectively spoof your location by connecting to a server in a different country, which gives your device an IP address from that country, so you can then access that region’s Netflix library. Keep in mind that VPNs tend to slow internet traffic—and the farther away the server, the slower the internet traffic—which can impact overall streaming quality. Also, using a VPN to bypass geoblocking is a big no-no as far as Netflix’s terms of service are concerned.

Here's a look at some of the best VPNs for streaming from the services we’ve reviewed:

Best for (streaming)
Cheapest subscription price
See full features
US buffering speeds
UK buffering speeds
AU buffering speed
Best VPN for streamingUS$5.75/mthFast (Netflix, HBO, Hulu)Fast (BBC iPlayer)Fast (Kayo, Stan)
Best cheap VPN for streamingUS$2.11/mthFast (Hulu, HBO, Peacock); Moderate (Netflix) Moderate (BBC iPlayer) Fast (Kayo, Stan)
Best VPN reputationUS$6.67/mthFast (Netflix, HBO, Hulu)Fast (BBC iPlayer)Fast (Stan); Moderate (Kayo)
Best VPN versatilityAU$11.99/mthFast (Netflix, HBO, Hulu)Fast (BBC iPlayer)Fast (Stan)
Best VPN dealUS$4.99/mthFast (Netflix, HBO, Hulu)Moderate (BBC iPlayer)Fast (Stan)
Best rated VPN (overall)US$3.79/mth (initial pricing)Fast (Netflix, HBO, Hulu)Fast (BBC iPlayer)Fast (Stan)

Can a VPN help with gaming?

Yes and no. VPNs are great for privacy but connecting to an external server also tends to increase your latency. The farther away your internet connection is from the VPN server you’re connecting to, the higher the latency. Higher latency can also introduce factors like packet loss, which can lead to an online gaming experience that’s anything but smooth.

That said, if your provider already has high latency, it may be the result of bad network routing, wherein your connection to a game server is jumping along an inefficient path of servers, thereby increasing your latency. A VPN may help improve your online gaming latency in this instance, particularly if you’re playing games on international servers.

How does a VPN work on iPhone and Android?

To use a VPN on a computer, you download and install the software, enter your credentials, then connect either automatically or manually to a server of your choice. On iOS and Android smartphones and tablets, VPNs are apps that you download and install, enter your credentials, then connect automatically or manually to a server.

The good news is more and more VPN services support a range of devices and multiple device connections, which means you can feasibly use a VPN single subscription to protect computers and mobile devices in your home. Surfshark, IPVanish VPN and Windscribe VPN all allow for unlimited connections, while Proton VPN, PureVPN, Private Internet Access, PrivadoVPN and Hola VPN support 10 simultaneous connections per account.

How a VPN works FAQs

The main disadvantages of VPNs are that they will slow an internet connection to some degree (some more than others) and the better options like NordVPN and ExpressVPN can be quite expensive. Outside of that, the other disadvantages are VPN-specific, like increased Google reCAPTCHA requests, blocked streaming sites and a restricted number of simultaneous connections per account.
A VPN changes your location by routing your internet traffic through a server that has an IP address that’s different to the one assigned to your internet connection by your provider.
It’s absolutely a good idea to use a VPN to improve the security and anonymity of your internet connection on compatible devices. Certain VPNs can also offer faster connection speeds to international sites and services (via better routing) and unlock typically geoblocked content, including international streaming services.
Nathan Lawrence
Written by
Nathan Lawrence
Nathan Lawrence has been banging out passionate tech and gaming words for more than 11 years. These days, you can find his work on outlets like IGN, STACK, Fandom, Red Bull and AusGamers. Nathan adores PC gaming and the proof of his first-person-shooter prowess is at the top of a Battlefield V scoreboard.

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