Generic Routing Protocol is a fully-patched tunneling protocol designed by Cisco Systems in which can encapsulate a multitude of network layer protocols within virtual private network connections or point-to-Point links over an Ethernet network. It also allows for secure VPN connectivity with firewall and authentication. In short, it encodes the IP packets as well as their addresses in an IP header. This enables a client computer to associate with a remote network. The same technique is applied to BGP or backbone area networking as well. Basically, it works in that a given (virtual) local area network has been extended via a secured connection such as a backbone.

A small network will be created in which all neighboring routers will act as if they are part of the same larger one (a Local Area Network). It will be possible for two Local Area Networks to interconnect through the use of a routing table. In order for this to work, a GRE protocol enabled router can send and receive the same gre packet, as well as send and receive any other type of standard GRE protocol packets.

In order for this to work, a number of checksums must be applied to the packets sent and received. One such checksum field is the fragment-checksum field. This checksum field verifies the existence and size of the next outgoing fragment in the packet. This checksum field must be present on every hop along a tunnel, or else the entire network will be vulnerable to attacks.

The main advantage of a GRE protocol is that it makes it possible for normal end-users to establish secure IP tunnels within corporate intranet systems. In other words, a user will be able to establish a secure gateway from his personal computer to a corporate server. Such a feature makes it possible for corporate network administrators to block any network user from visiting malicious or unauthorized websites. As a result, employees will not be able to gain access to certain sensitive information from internet cafes. Such features make it possible for business managers to manage employees who are performing risky activities on the company's computers.

IP packets sent through a GRE Encapsulation router will undergo a series of checks. At the very beginning of the session, the checksum algorithm will be applied. After the checksum algorithm is applied, then the packets are encapsulated and sent back down the tunnels. Again, the last checksum will be applied before returning the IP packet back to the client. This whole process will have to be repeated several times in order to complete the IP packets travel smoothly between corporate networks.

On the other hand, a GRE over Ethernet (GRE protocol) has much more advantages. First of all, it is much faster than the normal IP packet transmission over a network. Even though, it takes some extra work such as negotiation for different types of routes, the entire process is much easier than the normal IP packets traffic. Another great thing about GRE over Ethernet is that encapsulation is not needed for the packets. The encapsulation is only done at the very end of the session when the data is sent back to the clients.

Thirdly, aside from the fast speeds, another great thing about GRE protocol is that it supports several types of encapsulations, such as Diffie-HMRC, Secure Socket Layer, Secure Shared Authorized Data formats, and VPN (Virtual Private Network). All these different protocols are used for secure VPN which allow private browsing and allow large distances to be saved. Through the different types of encapsulations, large amounts of data can be compressed and smaller sizes could be maintained. This also means that bandwidth costs will not increase.

Lastly, there is also a way to create an IP packet encapsulated with the GRE protocol. This method is known as header proxy. In this method, the first IP header is brought and followed by the payload packet. The first header will contain the IP address of the source computer and the destination computer. Afterward, the payload packet will go on to the next network in the same system.