Helping people with computers... one answer at a time.
MAC and IP addresses are both key components to network, but they serve different purposes, and are visible in very different ways.
What is the difference between a Mac Address and an IP Address? Are both traceable back to your computer? And can you hide them? If by hiding them is your computer safer from hackers. Also, are the free versions as good as the ones you buy?
Well, the last one is easy to answer: there's no concept of free versus paid IP or MAC addresses. As you'll see in a moment, IP addresses are assigned as part of connecting to a network, and MAC addresses are assigned at the time hardware is manufactured.
Even hiding a MAC or IP address is a concept that doesn't quite apply, but we'll get in to that too.
And whether MAC or IP addresses are hidden or not, if you connect to a network these are not the kind of things you should be spending your time worrying about to stay safe from hackers.
A MAC (or Machine Access Control) address is best thought of as a unique serial number assigned to every network interface on every device. And by unique, I do mean unique; no two network cards anywhere should have the same MAC address.
You can see your network interfaces MAC addresses using the command prompt in Windows XP using ipconfig /all:
Ethernet adapter Local Area Connection 2: . . Physical Address. . . . . . . . . : 00-1D-60-2F-4B-39
Each network adapter on your computer will have one.
MAC addresses are typically used only to direct packets in the device-to-device portion of a network transaction. That means that your computer's MAC address will be in network packets only until the next device in the chain. If you have a router, then your machine's MAC address will go no further than that. Your router's MAC address will show up in packets sent further upstream, until that too is replaced by the MAC address of the next device - likely either your modem or your ISP's router.
So your MAC address doesn't make it out very far. Even if someone knows your MAC address, that knowledge certainly doesn't help anyone do anything either good or bad.
An IP address is assigned to every device on a network so that device can be located on the network. The internet is just a network after all, and every device connected to it has an IP address so that it can be located. The server that houses Ask Leo!, for example, is at 18.104.22.168. That number is used by the network routing equipment so that when you ask for a page from the site, that request is routed to the right server.
The computers or equipment you have connected to the internet are also assigned IP addresses. If you're directly connected, your computer will have an IP address that can be reached from anywhere on the internet. If you're behind a router, that router will have that internet-visible IP address, but it will then set up a private network that your computer is connected to, assigning IP addresses out of a private range that is not directly visible on the internet. All internet traffic must go through the router, and will appear on the internet to have come from that router.
Metaphors are always a tad difficult, but let's try this:
An IP Address is kind of like your postal address. Anyone who knows your postal address can send you a letter. That letter may travel a simple or complex route to get to you, but you don't care as long as it makes it.
The same is true of packets of data traveling on a network like the internet. The IP address indicates where a packet is destined, and the system takes care of getting it there. A letter may or may not also have a return address so you know who to write back to - a TCP/IP address always has a return IP address.
A router can perhaps be thought of as a company's mail room. You may send a letter to "Complaint Department, Some Big Company, Some Big Company's Address". The postal service will get that letter to the company. The company then notes that the letter needs to go to the complaint department, and routes it there using inter-office mail. And of course, all your outgoing mail is picked up by the inter-office mail courier and routed to the external postal service as needed.
When you're behind a router the same thing sort of happens - all of the packets destined for you are actually addressed to your router. It's the router that then determines which of your computers that packet might be meant for, and routes the packet appropriately.
In both cases - corporate mail room or networking router - the actual physical location of your office or the actual local IP address of your computer is not visible to the outside world.
A MAC Address is kind of like the color, size and shape of your physical mail box. It's enough that the postal carrier (your network router) can identify it, but it's unique to you, there's no reason that anyone other than your postal carrier might care what it is, and you can change it by getting a new mailbox (network card) at any time and slapping your name (IP address) on it without affecting your delivery.
As I said, it's not a perfect metaphor, but perhaps it'll help get some of the basic concepts across.
Finally, a word about staying safe from hackers.
MAC addresses aren't part of the discussion, simply because they never travel beyond your local network, and they can't be hidden as they're simply required for networking to work. Many network adapters allow you to override the MAC address, but even so it still identifies your computer on the local network.
IP addresses are also required for networking to work. The network has to know what computer to send data to. You can, in many cases, use things like anonymization services and the like to appear to be coming from a different IP address, but that doesn't change the fact that your machine is still reachable by some IP address.
Merely being connected to the internet, by whatever address you happen to use, requires that you take steps to stay safe. There's ultimately no way to completely "hide" your IP address without disconnecting from the network. What you should be doing are the classical steps to internet safety: get behind a router, keep your system up to date, run anti-malware scans, backup regularly and so on.
Since I know it'll come up, and as I've discussed over and over and over and over again, an IP address does not allow someone to find out your physical location or identity without law enforcement intervention. Similarly, you cannot find out someone else's physical location or identity without involving the authorities.