There are several types of firewall techniques:

Packet filter: Looks at each piece of information entering or leaving the network and accepts or rejects it based on user-defined rules. Packet filtering is fairly effective and transparent to users but is susceptible to IP spoofing.

Application gateway: Applies security mechanisms to specific applications, such as FTP and Telnet servers. This is very effective, but can impose a performance degradation.

Circuit-level gateway: Applies security procedures when a TCP or UDP connection is established. Once the connection has been made, packets can flow between the hosts without further checking.

Proxy server: Intercepts all messages entering and leaving the network. The proxy server effectively protects the true network addresses by representing the network behind it to the wider world. This is often referred to as Network Address Translation.

In practice, many firewalls use two or more of these techniques in concert, as does the version that Skymarket employs to protect your and our servers. In particularly sensitive areas, we use industry-recognised Cisco PIX equipment.

A firewall is considered a first line of defence in protecting private information. For greater security, data can be encrypted. See here for more details