A VPN encrypts all data (Surfing, IM, FTP, etc.) to and from your computer where a proxy typically only encrypts http (WWW) traffic. VPNs also tend to be MUCH faster and reliable than proxies.

To be fair, although limited in function, a commercial proxy, from a reputable company, may be fine for certain things.

Unfortunately, many try the free anonymous web proxy route. These can be set up (and shared) by literally anyone. Yes, anyone — criminals, hackers, child pornographers, well-meaning geeks who are running it over their Grandma’s cable connection. You just don’t know.

Utopian “fight the power” visions aside, using anonymous proxies means you may be pumping your passwords and personal data through a server setup by a couple enterprising 13-year-old hackers in Estonia.

Which may work out fine for you…but it probably won’t.