When you connect to a VPN, you get assigned an IP address from that VPN's pool. The type of IP address -- shared, dedicated, or residential -- determines what you can do with it and how it is perceived by websites and services.
Shared IPs (Standard VPN)
Most VPN connections use shared IPs: hundreds or thousands of users share the same IP address at any given time. This is good for privacy (your activity is mixed with others') but can cause problems: that shared IP may be flagged by Netflix, banking sites, or Google for suspicious activity if other users on the same IP have triggered security alerts. Shared IPs are free on standard VPN plans.
Dedicated IPs
A dedicated IP is assigned only to you. No one else uses it while you have it. Benefits: lower risk of being blocked by websites, fewer CAPTCHAs, and more consistent behavior for services that remember IP addresses (like banking apps that ask for a verification code when you log in from a new IP). Downsides: the IP is more identifiable as belonging to a specific user, reducing anonymity compared to shared IPs. Dedicated IPs typically cost $3-5/month extra on top of a standard VPN plan. Available from NordVPN, ExpressVPN, Surfshark, and others.
Residential IPs
Residential IPs are assigned by ISPs to real home users, not VPN data centers. From a website's perspective, a residential IP looks identical to a regular home internet connection -- not a VPN at all. This makes residential IPs much harder to detect and block. Use cases: web scraping (for market research, price monitoring), accessing streaming services that aggressively block VPN data center IPs, and bypassing restrictive networks that block known VPN IP ranges.
Residential IPs are typically sold through specialized services (Bright Data, Oxylabs, Smartproxy) at significantly higher prices than standard VPN IPs -- usually per gigabyte of data used ($3-15/GB depending on the provider). Consumer VPNs like NordVPN have residential IP add-ons for specific use cases.
Which Type Do You Need
For regular privacy and security: shared IP on a standard VPN plan. For banking, remote work, and reduced CAPTCHA friction: dedicated IP add-on. For streaming geo-bypass when Netflix blocks VPN data center IPs: dedicated or residential IP. For web scraping and automation: residential IP through a proxy provider.