As defined by Wikipedia, a proxy server is a " .. service that allows clients to make indirect connections to other network services. A client connects to the proxy server, then requests a connection, file, or other resource available on a different server. The proxy provides the resource either by connecting to the specified server or by serving it from a cache. In some cases, the proxy may alter the client's request or the server's response for various purposes."
It is important to review and understand the different types of proxies available and what level of anonymous surfing such proxy solutions offer. Remember, just because you are using a proxy doesn't mean that someone cannot discover your activities - choose wisely.
A common proxy application is a caching web proxy - typically used to reduce network bandwidth by caching commonly requested pages to provide co-located network clients quicker access. The caching proxy utilizes a expiry algorithm to determine wether the cached page can be loaded locally or retrieved from across the network. Filtering (think porn filters) and reformating (think phone / wap browser) routines can also be integrated into a caching web proxy to meet specific needs.
Many organizations use proxy servers enforce network use policies as well as provide security and caching services. With this, all activity is logged and individual requests can be tracked back to the originating source. Since the client application must be configured properly to route all requests through the proxy, the client can (with some effort) by resetting their configuration. Other proxy solutions that incorporate network address translation (NAT) services with proxy capabilities are more difficualt. These type of solutions can be called a transparent proxy, a transproxy, a forced proxy an intercepting proxy. Since proxy functionality is an integral part of the IP management process, bypassing this type of solution is a more difficult task.
So, how do we use anonymous proxies? Just like proxy servers in schools and offices, it should be noted that by using a proxy server (for example, anonymizing HTTP proxy), all data sent to the service being used (like a web server) must pass through the proxy server before being sent to the service, mostly in unencrypted form. It is therefore possible (and has been demonstrated) for a malicious proxy server to record everything sent to the proxy (including unencrypted logins and passwords).
It is possible to anonymize internet activities by chaining proxies which do not store (or reveal) data from the original requestor. However, the more hops the request must traverse, more traces will be left on the intermediate hops which could be offered up to trace the users activities. If the policies and administrators of these other proxies are unclear, unlisted or unknown, the user may fall victim to a false sense of security simply because those details are not readily available. Also, proxy location doesn't necessarily ensure anonymous surfing - while US entities can be subponea'ed to release records, other countries have similar laws in place, and those without rely on personal integrity that the operator will not use such data against the person for financial gain.
The bottom line? From Wikipedia: "Be wary when using proxy servers, and only use proxy servers of known integrity (e.g., the owner is known and trusted, has a clear privacy policy, etc.), and never use proxy servers of unknown integrity. If there is no choice but to use unknown proxy servers, do not pass any private information (unless it is properly encrypted) through the proxy." Good advice, indeed.
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