The Difference Between Residential and Datacenter Proxies

Published Jun 30, 2016 in Proxy Information

Luminati Website

Do you proxy? You must, because you’re here, wondering what the difference is between residential and datacenter proxies, which is a pretty specific line of questioning. You most likely saw the discrepancy on Black Hat Forum when searching out new providers. Large bold type advertised 100% residential IPs, and how much better they are than those corporate stooges, the datacenter proxies.

So, what is the difference?

There’s a simple answer, and a complicated one. The simple answer: Residential proxies are IP addresses from a standard Internet Service Provider (ISP), often DSL or cable, that are wired directly into your home. Datacenter proxies are IP addresses that come from a secondary corporation and are not located in your home.

If you’re satisfied with that you can stop reading, but I’m guessing you want to know not just the basic differences between the two, but how they affect your proxy use. I’ll get into the specifics below while outlining some common issues in the field.

Residential IPs, Expanded

As I said above, residential IPs come from an ISP. In the U.S. there are a notorious few number of providers (all of whose speeds suffer), but the fact remains that they will actually provide you with a connection to the internet. This also means they will provide you with an IP address, and that IP address will be registered as coming from that ISP.

I’ll use Comcast as an example. You call up Comcast and ask them to install internet at your house. The person comes and checks on your wires and tries to sell you a router you don’t need, and after that you can log onto the internet and browse with ease. If you browse to an IP locator website, like WhatIsMyIPAddress, you will see your IP address appear. Next to or below the number — which will look something like 88.99.77.666 or 888.99.77.666 — you’ll see your IP details. This will usually constitute your location, a map of your location, and your ISP provider name. In short, your IP address says a lot about you.

What is My IP Address

This is your residential IP address. Everyone has to have one, whether you’re a business or individual. If you’re on the internet, said internet has to be provided by somebody.

Proxies and Datacenters, Expanded

The datacenter IP addresses are the IP addresses not affiliated with an ISP, and they don’t provide you with internet. Instead, they hide or change the IP address that a site like WhatIsMyIPAddress sees. To those in the know, this datacenter IP concept sounds essentially the same as proxies as a whole. That’s because, for the most part, it is.

There are arguably many points in using a proxy, but the most basic and universal is anonymity. In my above example, if I’m using Comcast as my ISP, anyone can see roughly where I live based on the IP address provided. Not only where I live, but who I pay on a regular basis, and what my specific computer address is. That’s a lot of information out in the world.

Thus we invented proxies, because people don’t want their information out in the world. A proxy IP address has historically been created and stored in datacenters around the world. It provides users with a different IP address so that when someone searches the specific locale of your internet browsing, or tries to scrape your data, they won’t be able to trace it back to your ISP and actual IP address. This establishes a solid wall between your actual computer life and the computer life you browse the internet with.

These datacenter proxies, often supplied by a provider whose services you pay for, deliver anonymity in batches. The proxies themselves can be rotated so that over the course of a month you can have 10-100 different IP addresses, all of which are not traceable back to you. Anonymity at its finest.

The Discrepancy

The question then becomes, what is the problem? If you get internet from your ISP and mask the IP address with datacenter proxies, there should be no cause for concern. Except, in today’s overbearing technology-laden world, there’s huge concern.

Proxies are used systematically to scrape information, spam websites, and perform all sorts of potentially damaging attacks on individuals and corporations. They are also used by those big corporations (and individuals) to do things in a positive way, but that’s not the point right now.

Due to the negative associations of proxy use it has become common for larger corporations and entities, like Google, Facebook, and Netflix, to systematically search potential proxy users and ban their associated IPs. As such, datacenter proxies are the first on the chopping block. The theory is that a resident IP address is, most likely, a normal individual browsing the internet. That person is who these companies want on the internet. The moment it’s a potential proxy, there is cause for concern.

Proxy Blocked from Browsing

Of course I’m highlighting the most extreme circumstances here, as proxies, especially datacenter proxies, are used in the millions every day by individuals, companies, hackers, the government, etc. Not all datacenter proxies will be banned, but it’s one factor of many that goes into whether or not a company will ban an IP address.

The main way to judge this is what the “provider name” on that lookup form is — if it’s a country-based ISP like Comcast, you are less likely to be judged as a proxy hacker bot. If it’s some corporation that can be traced to a datacenter, it’s the first in a long line of potential red flags that could get your IP address banned by a site or company.

The Birth of Residential IP Proxies

For people that want extreme stealth and one less chance of being blacklisted, residential IP proxies seem like a no-brainer. Except they’re a bit complicated to actually procure. For traditional residential IPs, you live or work at the specific physical address — thus your are a resident of that place. If you want to buy somebody’s residence without living in that country — say a Brazilian resident wanting to use a residential IP address in the U.S. — how does that work?

The simplest solution is for someone in a location to order a high-end connection to the internet and set up a proxy service with their residential IP address. Except this is not going to go over with your ISP. Actually, in essence, this is what a proxy datacenter consists of, but of course they don’t lie to the ISP and claim they are just a normal person using the internet. The two are mutually exclusive, and both ISPs and major corporations want to keep it that way.

Yet you will find businesses online selling residential proxies (at a steep price), claiming no datacenter scum IP ever enters their database. Is this possible?

Residential Proxies

Honestly, it’s a bit unclear. One such service is IAPS Security Services, LLC, which has a long and storied thread on Black Hat World. The company offers a residential VPN, which is similar to private proxies, and offers them in a huge number of countries, claiming to work on legitimate terms with the ISPs themselves. This does seem like it could work — a company contracting with ISPs for direct residential IPs, and then selling them as proxies or a VPN network. If this were easy and possible, wouldn’t everyone be doing it?

There are many curious customers that question the legitimacy of IAPS Security Services, but there are also many people that use it. At the not-so-casual price of $50 per month, this is an expensive option.

There are other residential proxy services that claim to distribute proxies (as opposed to a VPN), and the reality of their legitimacy lies behind a barrage of complicated tech. It’s hard to tell if the company is really selling individual house connections, or just using datacenter proxies and hiding certain aspects of their location.

I advise you to do copious amounts of research in this area, and about a specific company, if you’re looking at purchasing residential IPs. Are you sure you need them in the first place? Elite Proxy claims all residential IPs are a scam, and reminds us that if we use an elite private proxy correctly, security shouldn’t be an issue.

The Case of Hola and Luminati

There is one unique player in this field — Luminati. Yes, the name brings to mind the secret cult described in “The Da Vinci Code,” and the evil world-bending conniption actually seems to fit in this example.

For those that don’t know, Hola is the world’s most popular free VPN. You can sign up and use the service for free forever, and with a click it will install itself as an extension on your browser. This will let you bypass geo-restrictions so you can watch Netflix from whatever country you want (among other things).

I won’t get into the technical aspects of the software, but know that when you decide to sign up and install the Hola software, it opens a permanent port to your IP address. This is all spelled out in the user agreement, so you actually agree to open your computer to the company. This means, in essence, that Hola can use your IP address (usually your residential IP address) for its own purposes.

In 2015 Hola was brought into the public eye for creating a botnet out these proxies, which numbered in the millions. The company sells this data to the highest bidder, and was traced back to a DDoS attack. That outing didn’t slow Hola down. In fact, it gave them an idea and a new business model.

Hola Botnet

Luminati is a company directly owned and operated in conjunction with Hola, and it allows anyone to utilize this 13 million IP network for their own purposes. If you go to the Luminati website you’ll find a straightforward and very expensive sales pitch: purchase our 13-million-strong residential IP network for a minimum of $500 USD per month.

If this sounds ridiculous and messed up, it is. But it’s also spelled out in clear terms in the user agreement of Hola, so those using Hola don’t know or don’t care that their IP addresses are being siphoned off to the highest bidder.

The funny part about all of this is that, inversely, Luminati seems to be the only thoroughly legitimate source of residential IPs. Of course, that’s only if you don’t care that they’re sourced from unsuspecting (but fully participating) users.

In The End

When it comes down to it, you shouldn’t really be concerned about purchasing residential IP proxies. If you’re that worried about being found out, it probably means you’re doing something illegal. Most illegal actions require a great deal of technical expertise. The same expertise will enable you to stay relatively safe with an elite private proxy that comes from a datacenter.

If you absolutely need a residential IP, consider some of the resources above. Do your research before you fork up the cash, and make sure you know why you need the service in the first place.

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