Page 93 - Electronic Commerce

Chapter 2

create when you dial a telephone number, a leased line is always active. The advantage of
a leased line is security. Only the two parties that lease the line to create the private
68 network have access to the connection.
The largest drawback to a private network is the cost of the leased lines, which can be
quite expensive. Every pair of companies wanting a private network between them
requires a separate line connecting them. For instance, if a company wants to set up
private network connections with seven other companies, the company must pay the cost
of seven leased lines, one for each company. Although the cost of leasing these lines has
dropped significantly over the past two decades, it can still be substantial, especially for
organizations that need to connect many offices or other locations to each other.

Virtual Private Networks (VPNs)
A virtual private network (VPN) is a connection that uses public networks and their
protocols to send data in a way that protects the data as well as a private network would,
but at a lower cost. VPN software must be installed on the computers at both ends of the
transmission. The technology that most VPN software uses is called IP tunneling or
encapsulation.
IP tunneling creates a private passageway through the public Internet that provides
secure transmission from one computer to another. The passageway is created by VPN
software that encrypts the packet content and then places the encrypted packets inside
another packet in a process called encapsulation. The outer packet is called an IP
wrapper. The Web server sends the encapsulated packets to their destinations over the
Internet, which is a public network. The computer that receives the packet unwraps it
and decrypts the message using VPN software that is the same as, or is compatible with,
the VPN software used to encrypt and encapsulate the packet at the sending end.
The word virtual is used as part of VPN because, although the connection appears to
be a permanent connection, it is actually temporary. The VPN is created, carries out its
work over the Internet, and is then terminated.
The VPN is like a separate, covered commuter lane on a highway (the Internet) in
which the passengers cannot be seen by vehicles traveling in the other lanes. Company
employees in remote locations can send sensitive information to company computers
using the VPN private tunnels established on the Internet. You will learn more about
VPNs, firewalls, and other network security devices in Chapter 10.

Intranets and Extranets
In the early days of the Internet, the distinction between private and public networks was
clear. Organizations could have one or more private networks that they operated
internally. They could also participate in public networks with other organizations. The
Internet was one such public network. However, as networking (and inter-networking)
technologies became less expensive and easier to deploy, organizations began building
more and more internets (small “i”), or interconnected networks. Some of these internets
did not extend beyond the boundaries of the building organization.
The term intranet describes an internet that does not extend beyond the organization
that created it. In the past, most intranets were constructed by interconnecting a number

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