What is a decentralized VPN and how do they work?

A decentralized VPN offers a new twist on traditional VPN technology by distributing network functions across numerous nodes rather than routing traffic through centralized servers. The idea behind it is that users are afforded better privacy and security by having a distributed structure. Moreover, dVPN could potentially be more resistant to censorship. However, it’s not always that straightforward.

What is a VPN in the first place?

A VPN is a service that sends all your internet traffic through an encrypted tunnel that nobody can see into. This encryption ensures that your data is transmitted safely, preventing third parties from eavesdropping on your activity. A VPN also replaces your real IP address with a different one, giving you greater anonymity while allowing you to appear as if you were connected from a different country of your choice. All this can be easily achieved through one tap or click in an app.

How does a decentralized VPN work?

A decentralized VPN (or dVPN) is different from a regular or centralized VPN because it uses a network of distributed nodes operated by individuals around the globe instead of routing traffic through servers operated by a single entity. This approach fundamentally changes how data is handled and aims to offer enhanced security and privacy. Here’s a breakdown of its workings:

• Peer-to-peer network. At its core, a decentralized VPN operates on a peer-to-peer (P2P) network structure. Users connect to the service not through dedicated servers in fixed locations but through a network of nodes provided by other volunteer users. Each node acts as a small, temporary server, creating a highly resilient and distributed network.
  
• Public IP location. Due to the P2P nature of the network, the user’s public IP address will be that of the last node it’s connected to, so there’s not much control over its location. However, it comes with the benefit of being able to use the residential IP address of that volunteer, thus helping overcome blocks against known VPN IP addresses.
• Encryption and routing. When you connect to a decentralized VPN, your internet traffic is encrypted, just like with a traditional VPN. However, instead of traveling through a single server, your data packets are split into smaller pieces and sent through multiple nodes in the network. This process, known as multi-hop routing, makes it significantly more difficult for intruders to track or intercept your data.
• No central authority. Without a central authority controlling the network, decentralized VPNs remove the risk of a single point of failure or attack. This structure makes it challenging for governments, ISPs, or hackers to monitor or censor user activity, enhancing user privacy.
• Token-based economy. Many decentralized VPNs incorporate blockchain technology and operate on a token-based economy. Users can earn tokens by offering their device as a node or spend tokens to use the network. This incentivizes participation and helps to scale the network while maintaining privacy and security.

As traditional VPNs have been known to get blocked in high-censorship countries—both via technical methods to disrupt connections or by blocking the purchase and download sites—decentralized VPNs could provide an answer for users in such countries looking to go online. However, dVPN might not be the best choice if you are seeking solid privacy.

Differences between a VPN and a dVPN

Despite their similarities, there are quite a few differences between centralized and decentralized VPNs. Here are the most important ones:

Is a decentralized VPN the same as Tor?

In short, no, but this doesn’t mean they don’t have some similarities, especially considering that both solutions encrypt your connection and route it through several nodes. However, they operate on different principles and architectures.

Tor, short for The Onion Router, is a network designed to anonymize user traffic through a volunteer-operated network of relays or nodes. When using Tor, internet traffic is encrypted and routed through multiple relays, each peeling away a layer of encryption (hence the “onion” name) before reaching the final destination. 

A dVPN also encrypts and routes traffic through multiple nodes, but it does so using a decentralized network often built on blockchain technology. Unlike Tor’s relay layers, dVPN nodes can be operated by anyone willing to share their internet connection, and transactions within this network can be secured and anonymized using blockchain.

Read more: Tor vs. VPN: What’s the difference?

Some other key differences include:

• dVPNs are generally faster than Tor. Tor’s multiple relay system can significantly slow down internet speed, making it less ideal for bandwidth-intensive activities. dVPNs, while also potentially variable in speed due to their peer-to-peer nature, can offer faster connections since they typically involve fewer hops.
• dVPNs are usually easier to use than Tor. dVPNs tend to offer a more user-friendly experience, similar to traditional VPNs, with straightforward applications and interfaces. Tor can be more complex to set up and is often recommended with additional security measures for optimal privacy.
• Tor provides greater anonymity than dVPNs. Tor is highly regarded for its ability to provide anonymity, making it difficult to trace activity back to the user. dVPNs prioritize privacy, encrypting data and hiding the user’s IP address. Still, they may not anonymize traffic to the same extent as Tor, depending on the network’s structure and the transparency of its nodes.

Advantages and disadvantages of dVPNs

As with most solutions, dVPNs come with advantages and disadvantages. Here we will cover the most important ones:

Are decentralized VPNs safer than centralized VPNs?

This question is a lot more complex than it appears at first glance. In a nutshell, the answer is that decentralized VPNs are not inherently safer than centralized VPNs, and they could pose a more significant risk because you’re essentially trusting more people with your data. But let’s delve a little deeper.

Open-source foundations

Both dVPNs and traditional VPNs rely on open-source protocols, such as OpenVPN, for their core operations. The open-source nature allows for community scrutiny, which can help identify and rectify vulnerabilities. However, the implementation of these protocols by VPN providers can vary. While dVPNs tout their open-source apps for transparency, traditional VPNs benefit from open-source foundations’ security and reliability.

Conclusion: Nearly all VPNs use open-source protocols.

Decentralized vs. centralized servers

dVPNs distribute data across a network of user-operated nodes, potentially increasing the number of entities that could access your data. In contrast, traditional VPNs route traffic through centrally controlled servers. While this central control might seem like a single point of failure, it also means that a reputable VPN provider can enforce strict security protocols and undergo audits to verify their no-logs policies, concentrating trust in a single, accountable entity.

Conclusion: With dVPNs, your data goes through many more parties that can compromise it.

Server compromise risks

The decentralized structure of dVPNs means compromising user privacy requires accessing just one node, compared with the need for compromising multiple nodes in networks like Tor, which are designed to prevent any single point from seeing the entire picture of a user’s activity. Centralized VPNs are also harder to compromise because they use servers in data centers. This structure potentially makes dVPNs more susceptible to targeted attacks by well-funded adversaries.

Conclusion: Decentralized servers are easier to compromise than Tor or centralized servers.

Incentivization and security

The crypto-based incentivization model of dVPNs aims to reward node operators, theoretically encouraging better service and maintenance. However, this model also allows well-resourced malicious actors to dominate the network by setting up high-bandwidth nodes, thereby centralizing data flow through potentially compromised points. This contrasts with the trust-based model of traditional VPNs, where user trust is built on transparency, audits, and a history of reliable security practices.

Conclusion: The incentive makes it easier for well-funded actors to compromise dVPNs.

Payment anonymity

While dVPNs highlight cryptocurrency payments as a feature for anonymity, many established VPN services also accept crypto, offering similar levels of payment privacy without necessarily tying service quality to the volatile crypto market.

Conclusion: You can already pay centralized VPNs anonymously.

In summary, while we’ve covered some advantages, most users would be better off with a premium centralized VPN such as ExpressVPN in practice. It has the best infrastructure and security of any VPN to get the best possible speeds, solid privacy and security features, and always available customer support to help you in case you need it.

Is a decentralized VPN better than a no-logs policy?

Deciding whether a decentralized VPN is superior to a traditional VPN with a no-logs policy rests on understanding each offer’s distinct privacy assurances.

dVPNs distribute traffic across multiple nodes, theoretically reducing the risk of any single entity capturing and logging your data. However, there is no real way to know if the node operators aren’t compromised or logging your data somehow. As the nodes are anonymous and paid for with cryptocurrencies, tracking who they are is difficult. Conversely, a no-logs policy in centralized VPNs is a commitment not to store or track user activity. Trust in this policy depends on the provider’s reputation, regulatory environment, and, occasionally, independent audits verifying the claim. ExpressVPN has demonstrated the strength of its no-logs policy when a server was seized by Turkish authorities but turned up no relevant data about the user in question. The no-logs policy is central to a VPN’s success, meaning it’s in the user’s and the provider’s interest to keep it valid.