VPN4ALL encrypts all your data (Surfing, shopping, banking, VOIP, IM, email, FTP, etc.) as it transits over the internet to and from your computer, whereas a proxy typically doesn’t encrypt traffic, it only acts a substitute for your real IP address. A substitute for an IP does not provide you with very much security because before your personal data even reaches the server proxy that will change your IP, your data must pass through some public routers where it is vulnerable to sniffers and hackers. So you may very well be using a proxy but have already given away your real ID and personal data on the way to that proxy server.
VPN4ALL also tends to be much faster and more reliable than a proxy. To be fair, although limited in function, a commercial proxy, from a reputable company, may be fine for certain things. Unfortunately, most proxies are found through 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 of enterprising 13-year-old hackers in Estonia. Which may work out fine for you – but it probably won’t.
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