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Finance glossary

What is a firewall?

Bristol James
3 Min

When information flows into or out of a network, it flows through something called a “port.” Firewalls protect these ports by limiting what information is allowed to flow in or out of them. Firewalls rely on your household or organizational security policies to determine what information is allowed to pass through the ports in your network.

For most residential networks, firewalls limit most incoming traffic, but for business networks, higher levels of incoming traffic may be considered normal. Regardless of whether this protective security device is used in commercial or residential settings, its purpose remains the same: to ensure safe traffic can pass through and limit dangerous traffic from entering.

History of Firewalls

When they were first established in the 1980s, firewalls monitored individual data packets, deciding which ones to enter into a computer network and which ones to block. They assessed each data packet to figure out where they came from and where they were trying to go within the network. Packet filtering firewalls helped prevent malware attacks effectively, but a lot has changed since then.

Now, firewall protection is more detailed and broader reaching; network firewalls today are used as application layer firewalls, meaning they can monitor traffic at the application layer, providing deeper protection to the network. Additionally, all firewalls used to be hardware firewalls, but now, with the cloud-based approach to computer systems, many people opt for a software firewall instead. Both options are still available.

Different Firewalls Available Today

Depending on security concerns and the level of network protection needed, there are plenty of firewall options available today:

Proxy Firewall

An earlier form of network protection, a basic firewall called a “proxy firewall” sits between users and servers. It is an application layer firewall that filters traffic at an application level and boosts security by preventing external network connections.

Stateful Inspection Firewall

Stateful firewalls monitor all active network connections, look at the context of the traffic flowing through, and ensure that only safe, legitimate traffic is allowed to enter.

Unified Threat Management (UTM) Firewall

For more robust network protection, UTM firewalls combine firewall protection with intrusion detection and prevention, antivirus features, and content filtering into one solution.

Next-Generation Firewall (NGFW)

Next-generation firewall technology does more than basic a packet filtering firewall; it blocks more advanced threats such as malware and ransomware attacks, filters based on geolocation, and addresses ever-changing security concerns.


  • A firewall is a security device that uses predefined firewall rules or security policies to regulate the flow of data and users into and out of a network.
  • Initially developed in the 1980s, firewalls began with packet filtering to block malicious data but have since evolved to provide deeper, application-layer protection, and are now available as both hardware and software solutions.
  • Modern firewalls include proxy firewalls for application-level filtering, stateful inspection firewalls for monitoring active connections, Unified Threat Management (UTM) firewalls for comprehensive security, and Next-Generation Firewalls (NGFW) for advanced threat protection and geolocation filtering.



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