In a network, a proxy server is the entity that sits between corporate client machines and the Internet. For example, it may sit between a client application, such as a Web browser and the corporate server. Proxies are used to intercept incoming and outgoing requests to see if it can fulfill the requests itself. If not, it then forwards the request to the real server.
The most common types of proxy servers are called Forward and Reverse proxies:
A forward proxy is used to forward outgoing requests from a private network or intranet to the Internet, usually through a firewall. The main goal of the forward proxy is to provide a level of security and also to reduce network traffic.
In contrast, a reverse proxy handles requests coming from the Internet to the private network or intranet. This provides a level of security that prevents the Internet clients from having direct access to data on the corporate servers.
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Most large businesses, organizations, and universities these days use a proxy server. This is a server that all computers on the local network have to go through before accessing information on the Internet. By using a proxy server, an organization can improve the network performance and filter what users connected to the network can access.
A proxy server improves Internet access speeds from a network primarily by using a caching system. Caching saves recently viewed Web sites, images, and files on a local hard drive so that they don't have to be downloaded from the Web again. While your Web browser might save recently viewed items on your computer, a proxy server caches everything accessed from the network. That means if User1 views a blog article at www.blog.techyoddha.com at 1:00 and User2 views the same page at 1:03, he'll most likely get the page straight from the proxy server's cache. Though this means super-fast access to Web pages, it also means users might not be seeing the latest update of each Web page
The other main purpose a proxy server is to filter what is allowed into the network. While HTTP, FTP, and Secure protocols can all be filtered by a proxy server, HTTP is the most common. The proxy server can limit what Web sites users on the network can access. Many organizations choose to block access to sites with objectionable material such as hacking information and pornography, but other sites can be filtered as well. If an employer notices workers are spending too much time at sites like eBay or orkut.com, those sites can be blocked by the proxy server as well.