Proxies Vs. VPN?

You are wrong here in that using a proxy or VPN has nothing to do with making anything appear natural.

The IP address that you are using to create links from makes no difference as far as the search engines are concerned. Where the use of proxies or a VPN comes in is to hide your real IP address from the sites where you are building the links off of.

For example, if you are creating a bunch of different social bookmarking accounts at a bookmarking site, if you keep doing it under the same IP address, they will catch on. If you keep logging into multiple accounts from the same IP, they will also catch on.

If you are doing a bunch of blog commenting, eventually your IP address may get flagged for spamming, whether you were or not.

If you are setting up a bunch of Web 2.0 sites, same thing. The service providers may flag your IP if you setup 25 accounts in a couple of days with them.

Those are some of the reasons people choose to use proxies or a VPN. They are different in how they work, but similar in what they do. A VPN you can tell to automatically rotate your IP address every so often. I have one that rotates every 60 minutes. That works fine for things like Magic submitter or Linkwheel Bandit. A VPN will not work for something like Scrapebox. It takes the VPN 10-15 seconds to rotate the IP address. Scrapebox doesn't wait around. Plus, Scrapebox will burn through a single IP very, very quickly.

VPN is the cheaper option to go with and depending on which VPN you choose can give you access to thousands of IP addresses. I've tried a VPN with pretty much all of the most popular tools out there. Worked with all of them.

For Scrapebox, you need public or private proxies though.

Very good explanation, I appreciate it and will look into a mix of the two then depending on the tools I end up working with.

Proxy and VPN are used for anonimity and security data.
Proxies are used in business networks to create an intermediary between web clients inside the network and web servers outside it. Proxy = a computer which communicates on behalf of another computer.
VPN is used to allow people working from remote locations to access their company's data network as if they were connected from within a company office.

The proxy provides the resource either by connecting to the specified server or by serving it from a cache while in the other hand VPN can act like a “tunnel” which encrypts your data and ensures that it can safely make its way out of a questionable network and into a network that you can trust.

You don't need to go in-depth with these two, actually.

If you're using automated tools such as Scrapebox or Senuke X, you need proxies(anonymous). Proxies can be rotated by the software as it has more control over it, whereas if you're using a VPN you're fixed to a single IP each time. Even HMA(Hide My Ass) which as a software that could change its IP for an X-number of minutes, it won't properly synchronize with the automated tools.

So, use proxies(anonymous/elite) if you're using automated SEO tools, much better if you use private proxies so they're exclusive for your use.

With Scrapebox and Link Wheel Bandit, you need proxies. I recommend using shared proxies - much cheaper than private proxies and they are just as good: Buy Shared Proxies, only $0.50 each! Shared Max 10 Users