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When we connect to a VPN server, all data that we send and receive are in encrypted form. But when data is sent from the VPN server to the destination, is the data encrypted?

If not then any hacker can sniff the packet and see the details.

Example: connecting to HTTP website using VPN.

So are we compromising privacy using VPN?

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  • VPN does not replace HTTPS. However, it's more likely that an attacker can sniff your connection on your end than on the server's end. Luckily, HTTP is becoming a thing of the past.
    – user163495
    Commented Mar 9, 2021 at 22:30

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But when data is sent from the VPN server to the destination is data encrypted? ... So are we compromising with privacy using VPN?

A VPN does not compromise your privacy. Instead it reduces the privacy problems (as long as one can trust the VPN provider) but it does not fully solve these.

VPN is used to tunnel through untrusted (privacy implicating) networks and then come out with a different IP address than your original external IP. Nothing more is done. Thus if you don't trust your ISP or your local WiFi Hotspot a VPN will help to tunnel through these. If you want to hide your original IP address from the final server a VPN will help in doing this. But that's all. VPN does not make magically the connection to the final server secure - unless the VPN ends exactly at the server (usually not).

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Let’s say you use a VPN server in New York. When your device wants to send a message to some destination it instead sends an encrypted message to the VPN server, and the VPN server sends the original message to the destination with address details changed so the receiver thinks the message comes from someone in New York.

So a hacker with unlimited resources would find that you sent a VPN message to a server in New York, and that a VPN server in New York sent a non-vpn message to some recipient. There would be no connection between the messages. And while your isp or gchq might be able to observe your internet connection they wouldn’t be able to observe the vpn server. So they will notice an http message from your device at your home, but not an http message from some random place in New York to a random receiver.

Your privacy is not reduced. If you used http then you go from “no privacy at all” to “no privacy if an attacker can find your needle in the vpn server’s hay stack”

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