What is an IP address?
Just like every house has its unique number so does your computer have a TCP/IP (internet protocol) address which identifies your machine to the internet. An example of an IP address is 18.104.22.168. Your ISP provider assigns you an IP address each time you connect to the Internet. It is either dynamic or static depending on your internet connection (DSL, Cable, LAN…). IP address reveals your country, town, your location overall. Many do not know that IP address as much as most other things in computer world can be manipulated. For example your real IP address is 22.214.171.124 which is in India, Mumbai but you would want to fool someone and make believe you are in the USA. To do that, you need to change/mask your IP. The easiest way is to get a proxy.
What is a Proxy?
A proxy server is a computer that sits between a client and a server to intercept requests. There are several uses of a proxy server, most common are two. First use is to speed network traffic by caching pages or files that are requested often. By doing so, the proxy server can deliver the request quickly, only polling the server when required. In this way, a proxy server not only speeds up network traffic, but also relieves server load. For this we use transparent proxies. Transparent proxies do not mask your internet protocol.
Second use of proxy is the hiding of your IP. Here anonymous proxies, socks4 and socks5 come in place. To find proxies go to Samair.ru or search for proxy on google. Proxy servers come in a format like this: 126.96.36.199:3126. 188.8.131.52 is the IP address and 3126 is the port. To apply a proxy to your machine do the following in Internet Exploer:
1.On the Tools menu in Internet Explorer, click Internet Options, click the Connections tab, and then click LAN Settings.
2.Under Proxy server, click to select the Use a proxy server for your LAN check box.
3.In the Address box, type the IP address of the proxy server.
4.In the Port box, type the port number that is used by the proxy server for client connections.
5.You can click to select the Bypass proxy server for local addresses check box if you do not want the proxy server computer to be used when you connect to a computer on the local network (this may speed up performance).
6.Click OK to close the LAN Settings dialog box.
7.Click OK again to close the Internet Options dialog box.
What is a Socks Proxy?
The principle is the same as in anonymous proxies but socks allow far grater anonymity because Socks is a chain of proxies connected together. The more different hops you make your data jump the more difficult it is to trace back to you.
The diagram of SOCKS:
You–> Socks1–> Socks2–> Socks3–> …–> Target (web)
People who have to trace you will have to contact X persons to ask for their logs or data information. Chances are one of them already lost the log or didn’t log at all. And the logged IP seen by each Host is the previous host/socks in the chain. Imagine this as a highly time consuming and almost impossible task.
We know SOCKS4 and SOCKS5 proxies. In general they are mostly the same, but one big difference that is socks4 does not support authentication (secure server, https) while socks5 has the built-in mechanism to support a variety of authentications methods.
This is what online scammers apply in various aspects. Either to gain access somewhere anonymously, pretend to be someone else, open a fake bank or online payment processor account like paypal. You ofcourse need a lot more than just a hidden IP to open up such an account, but about this here in article How Scammers Open a Fake Paypal Account.