Difference between a private IP from AWS, DigitalOcean vs a proxy IP

Difference between a private IP from AWS, DigitalOcean vs a proxy IP

A question on Quora on the difference between IP addresses from cloud providers and proxy IP addresses is still unanswered to this day. A straightforward answer on Quora won’t be enough to explain the differences and similarities between the two. 

Many Internet users don’t know the difference between the two. In this article, we are going to explain what cloud providers are, what is an IP address and a proxy server, and what services cloud companies offer to their users. All this information should act as a starting point for anybody looking to delve into this matter. Especially developers, who are the primary users of these services and who need to use various types of IP addresses in their apps. 

What are cloud services

Anybody heard of AWS – Amazon Web Servers, Google Cloud, Digital Ocean, or other cloud services.


These companies offering cloud services sell services related to the infrastructure of other platforms, apps, or websites, such as web hosting, app hosting, remote servers (which can be considered remote computers). 

In essence, they sell computing power to companies and developers who do not want to purchase it physically. For example, running a web app like Trello will require a physical web server connected to the Internet. For a company running such an app to avoid outright buying of a server, it can reach to cloud services companies and rent a server to run the app without worrying about the physical component (the actual server rack). 

There are several benefits for which a company should opt-in to buy cloud services:

  • no need to maintain a physical server (they are expensive)
  • elastic computing power – they can rent as much or as little computing power as they need 
  • distributed computing power – cloud services have servers in several locations, a company purchasing computing power from them can spread their web servers across the world to increase response speed and avoid high latency

What is an IP address

For a device connected to the Internet, an IP address is what a phone number is to a phone connected to a phone carrier. It acts as a unique number that identifies a device in relation to other devices. 

For example, a PC connected to a web server advertises a specific IP address that the webserver uses to know where to return the requested web page.

IP addresses are allocated by Internet Service Providers, and all devices located in the same area (and connected to the same ISP) tend to have similar IP addresses.

So, when a web site is accessed from a particular IP address, it knows that the user identified with it [with that IP address] is located in a specific location (state or city).

What are proxy servers

Proxy servers are designed to mask their users’ real IP addresses and replace them with the proxy IP to websites.

In other words, a proxy server acts as an agent between its users and the rest of the Internet. 

When a user, located in Italy, uses a server located in Canada for accessing a website located in the United States, the IP address that the webserver will see will not be the Italian one (offered by the user’s ISP) but the Canadian proxy server’s IP address.

These servers are used to either bypass local firewall or to access restricted websites (for example, Ticketmaster can’t be accessed from outside the US, so you need a proxy server with a US IP address to access it).

Now that you know what cloud providers are and what an IP address is, let’s see where the two cross paths.

Services offered by cloud providers

Regarding services in this industry, there are several big players such as Amazon, Microsoft, IBM, and Google, representing more than 60% of the market and then other small players for the rest of the industry.

Almost all cloud services offer the same type of services. What a company or developer can buy from AWS, can also get from Google Cloud or Digital Ocean.

All these services offer almost all types of cloud services, including IP addresses.

In general, cloud services split into various categories:

  • IaaS – infrastructure as a service – renting raw computing power (renting actual servers, bandwidth, IP addresses)
  • SaaS – software as a service – offering apps and software as a final product (such as Google Suite, Trello, Google Docs, AirTable, etc)
  • PaaS – platform as a service – computing power offered to perform various functions, such as a VPS – virtual private server to run an app

The best way to demonstrate how such a cloud service works is by showing an example. 

In this case, let’s consider a flight price aggregator web app that scans airline websites and offers an air ticket price comparison. We shall name this app CFD (Cheap Flights Demo).

CFD is a SaaS (software as a service) tool type because you use the software developed by the company to perform specific tasks, and you don’t install it locally. Instead, it runs in the cloud. 

Furthermore, for CFD to function, it needs to be hosted on a web server that you can reach by accessing CFD’s website. The website is hosted on Digital Ocean servers at a set IP address (provided by Digital Ocean). In this case, Digital Ocean acts as a PaaS (platform as a service) offering a virtual machine that CFD developers rent to deploy the app. And when a user types CFD’s domain address in his browser, the browser will look for the CFD website at the IP address offered by Digital Ocean.

In this case, CFD’s website IP address acts as a regular IP address. It is used to identify a device – the CFD app server.

However, CFD needs to reach several airline websites at the same time. To avoid any rate-limiting put into effect by airline websites, it will access them through multiple proxies. In this way, CFD hides its server’s IP address and will use proxy IP addresses. 

So, every time a price request is made, airline tickets won’t know that the CFD app was the one making the request. Instead, it will identify each request coming from the proxy IP addresses as unique and unrelated.

The proxy IPs used by CFD can be either bought from cloud services or third-party proxy services. 

Can a cloud provider become a proxy server?

Depending on their terms and conditions, a cloud service can also offer bulk IP addresses that can then be converted into proxy servers. In this case, the cloud company gives IP address as IaaS – infrastructure as a service. But, once purchased this way, the proxy server needs to be setup by the developers looking to use them. On the other hand, those developers can get ready to use proxies from dedicated companies. It all depends on their preferences.