So what is the difference? Both VPN and TOR anonymize and encrypt your connections.
TOR is based on open-source and it’s run by volunteers, which means it’s a free service. You pay no money to use TOR.
TOR is a layered approach.
Let’s say you use your computer and you want to perform a Google Search, but you want to do it over TOR.
This means that the traffic from your computer will hit one TOR layer, which encrypts it and gives it to the second layer, third layer, fourth layer, […], and finally exists the layers and hits Google Search.
All TOR users have at least once felt it: It’s slow. There are multiple layers, so it takes a little bit of time to establish the connection.
Also, it’s worth mentioning that anybody can run those layers. If there are bad people running the first or last layer, they will be able to see some unencrypted traffic.
Another thing is affects TOR is that since it’s so popular, there are all kind of people using that service. That’s why some Clearnet websites will not let you access their services if you come (build the connection) from the TOR network. For example some online stores or some streaming services will simply not work when you use TOR.
However TOR can also be used in a different way. There are services where you can run a website inside the TOR network. This is known as a TOR hidden service.
The best known TOR website was the Silk Road service, which was providing illegal services including selling drugs and drugs over the TOR hidden service network.
VPN Providers don’t use a layered approach.
VPN Providers typically have dozens of data centers around the world and you pick one data center and all of your traffic will be encrypted and routed through that data center. It’s going to be much faster, because there are no layers.
If you trust your VPN provider, in that sense there’s not going to be an enemy who could possibly look at some of your traffic if they happen to be the first and last node.
And since most VPN traffic is by corporate users for business purposes, these don’t get filtered nearly as badly as TOR traffic does.
You shouldn’t get the misconception that everything on the TOR is bad, because this isn’t true. All kinds of people use TOR, I use TOR myself.
TOR is especially important for dissidents living in totalitarian countries.
TOR: Is slower, gets filtered more, but is free.
VPN: Better performance, less filtering, but you have to pay for it.