A Virtual private server (VPS) is a marketing term, used by Internet hosting services to refer to a virtual machine for use exclusively by an individual customer of the service. The term is used to emphasize that the virtual machine, although running in software on the same physical computer as other customers’ virtual machines:

• is functionally equivalent to a separate physical computer
• is dedicated to the individual customer’s needs
• has the privacy of a separate physical computer
• can be configured to run as a server computer (i.e. to run server software)

The term Virtual Dedicated Server or VDS is used less often for the same concept.

Each virtual server can run its own full‐fledged operating system and can be independently rebooted. The practice of partitioning a single server so that it appears as multiple servers has long been common practice on mainframe computers and mid‐range computers such as the IBM AS/400. It has become more prevalent with the development of virtualization software and technologies for microcomputers.

A dedicated server is a single computer in a network reserved for serving the needs of the network. For example, some networks require that one computer be set aside to manage communications between all the other computers. A dedicated server could also be a computer that manages printer resources. Note, however, that not all servers are
dedicated. In some networks, it is possible for a computer to act as a server and perform other functions as well.
In the Web hosting business, a dedicated server is typically a rented service. The user rents the server, software and an Internet connection from the Web host.

Using a VPS is great in the beginning, the price is low but when you get more traffic and make more money the safest way to secure this is to get a dedicated server. When renting a VPS you are sharing it with other people, you only need one rotten apple to mess things up for the rest. If he does something stupid and you are on the same server and that server goes down, your site will go down too. This will result in money loss, time and data loss and maybe even traffic. That’s why you can better go for a dedicated server from the moment you are making enough money to pay for it monthly. When you have your dedicated server you are in control of that server and no one else.