A VPN is kind of like sending a letter through the post office using someone else’s address. Like if you put the grocery store’s address on it and then stuck it in with their outgoing mail.
It gets your letter there and the post office doesn’t know your actual address, they think it came from the grocery store. Likewise, the person receiving your letter thinks it came from the grocery store too.
And the VPN handles it in reverse by taking a letter from that person and even though it gets to the grocery store, it gets delivered directly to you and no one else except you and the grocery store know that’s not actually your real address.
For privacy, this is great at protecting you from websites you don’t want knowing your real IP address which can reveal things like your exact location in the world, say Facebook. You want to use Facebook to talk to granny but you don’t want Facebook knowing your real public IP.
Some people also use them for tricking websites into thinking they are elsewhere. When you subscribe to a VPN service, they often show you different servers around the world and you can choose to appear like you’re in the UK even though you’re in the US. A site like Netflix may show Rick and Morty only to UK residents so you use a VPN to trick them into showing you shows like that.
I thought like you and looked into setting up Tor to cover all outgoing connections, and it seemed possible last I checked years ago, but the connections are too slow for it to make any real sense to replace why most people opt for a VPN.
Your computer is hopping through multiple computers to create a hopefully secure tunnel that hides your true identity over Tor.
But when you think of using this for downloading something like a torrent, your speed is cut by every connection in this layered network. Your speeds are lowered just because it’s having to go from you in the Netherlands, connecting to some computer in Egypt, connecting to some computer in Idaho, US, and then connecting to the file’s location in the UK. This is also not taking into account the different speeds of each connection, where your connection may be a Gb in speed at home, but Idaho’s connection may be 100 Kb speed which contributes to a much slower download.
Whereas a VPN connects you from the Netherlands to a server, maybe even one in the Netherlands, and then to the UK. This server almost always has a guaranteed high speed attached to it and is always available to you at your choosing and minimizes the speed drop due to hopping.
Tor was designed mainly for information to be shared in as anonymized of a possibility as possible. Hence why it’s always connected to a web browser and not acts as a service that covers all outgoing and incoming connections for your entire computer. It is best used for someone in a restrictive place like North Korea to write up a news article or blog post to share text quickly and securely. The added benefit is that it reduces the leakage of identity of you because you’re not paying for it with something that can tie back to you. And some Tor browsers are portable, so there’s no need to go through the process of installation which can be restrictive or throw a red flag.
It’s generally seen as discourteous to use Tor for downloading large files as well because you’re negatively impacting the network for others who rely on this service by further lowering the speed of the connection. And many people know whistleblowers use Tor, so it can be a literal life and death situation for someone who depends on as fast of a connection over Tor than you to get some free movies.
A VPN is great when you need a specific location too. When you use it for something like Netflix, you’re using it because Netflix blocked your region from watching a specific show, usually. So Netflix won’t let you see Rick and Morty in the Netherlands, but they will show it to someone in the UK. If you use Tor, never mind the slow, awful performance of such a stream, you’re not guaranteed to get a connection to the UK in Tor. Tor is randomly deciding how to route your connection for you. You may come out the other end in the US and have an even more restrictive catalogue to choose from.
If I’m reporting on something the US government is doing, I may want people to know I’m in the US, but not know my actual location, so I’m coming from South Carolina but I’ll make it look like I’m in New York instead. Or I may want to throw someone off entirely and the VPN will ensure I’m choosing something way off course like a server in South Africa. Something I specifically know I am choosing and not depending on a random hop at the service’s choice.
The other important part of this are the computers in between your connection. It’s not a secret that various American alphabet agencies have Tor nodes set up. You may be unlucky enough one day to have the entry and exit nodes in your connection be FBI computers capturing everything about your connection for that day and you’d not necessarily know it. But you get a VPN that’s been around for years and has an established track record in another country where the US is unlikely to be and you can be a little more assured that your information is safe from US authorities. Mostly safe, but the risk is still there in some capacity, to be accurate.
Edit: made a few corrections for accuracy sake