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VPNs use the tunneling capability of IPSec to transparently move private data across the public Internet. Tunneling treats entire packets from a private internetwork as payload data that must be transported across a public transport network.

A VPN gateway acts as one end of a "tunnel," encapsulating entire packets from the private inter-network in new IP packets before they travel across the public Internet. The new packets, carrying the private source and destination addresses, are simply directed to a second VPN gateway that protects the other end of the transmission. The receiving gateway then recognizes and disassembles the encapsulated packet before passing its contents on to the correct address on the private internetwork.

A variety of different network devices and software products can act as VPN gateways, including VPN access servers, VPN routers, and computers with VPN client software installed.

The private network resources on each internal network, whether single machines or entire internetworks, remain unaware of the fact that the Internet is being used as a transmission medium. A VPN gateway forms the foundation of a secure Internet-based portal to those resources, since it is designed to unconditionally reject all Internet traffic that is not tunneled IPSec.

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