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The Hidden Value of IPv4 Addresses

Co-authored by Lee Howard, Senior Vice President at IPv4.Global and Leo Vegoda.

All devices that connect to the internet need unique addresses. The number of IP addresses is limited, creating a demand for addresses worldwide, particularly in the cloud computing industry. This demand has raised the value of IPv4 to levels that the internet’s original developers didn’t predict, in part because the internet was considered an experiment at the time. Of course, use—and so demand—has exceeded anyone’s realistic expectations.

Growing demand for globally unique IPv4 addresses from infrastructure companies means their value has gone up. In 2011 the going rate was about $10 per address. The price is now over $50 per address.

The internet’s routing system now gives network operators much greater flexibility over what can be routed. This means that if an organization can free up some of its address space, it has the option to profit.

What is IPv4, and What Does it Look Like?

We use devices to send data across the internet. They have numeric “To” and “From” addresses, a bit like how envelopes have addresses on them. They are Internet Protocol, or IP, addresses. The most widely deployed version is IPv4. There are about 4.3 billion IPv4 addresses in total, but ordinary internet devices can only use about 3.8 billion of them.

Advantages of IPv4

When the internet was starting, its routing system had less flexibility. An organization that needed just 15,000 IPv4 addresses could not have got a block that closely matched its needs.

At the time, there were three sizes of IPv4 address block available. Class C was the smallest, with just 256 addresses. An organization that needed 15,000 addresses would have needed 64 of these, which would have been complicated to configure.

Class B gave an organization just over 65,000 addresses. This left lots of room for growth. But even after several decades, they would probably still have lots of unused IPv4 addresses.

Class A blocks contained about 16 million addresses. They were so large that very few were ever allocated.

Many organizations that got Class B address blocks back in the early days of the internet. The routing technology is now more flexible, allowing many different sizes of network to be routed. Unlike earlier routing technologies, with IPv4, we are not limited to the small, medium and large IP spaces of the early years. IPv4 address blocks accommodate to the exact amount a company means, which means less excess space and less risk of needing more.

The Most Valuable IPv4 Addresses

IPv4 addresses are mostly fungible, but not completely. An IP address block that has been used to send spam or serve malware has less value than a responsibly managed one. Buyers research the reputation of the blocks they are interested in. Blocks that have a negative reputation will probably need work to repair that reputation from the new user. So, a block with a good reputation is worth a premium.

Buyers will also consider whether addresses will be moving to new geography. Many web services have a default language based on the IP address of the user. Many content services are only available to users in specific locations for licensing reasons. A block from the same country or state can be less work for the buyer.

Difference Between Device and Client IP Usage

The United Nation’s probabilistic population projections for 2020 were 8 billion people. Even if the population numbers are a bit lower, we have at least two people for each IPv4 address. Each computer, phone, and increasingly each car or television uses at least one IP address.

Most of those addresses can be “clients.” Clients, unlike devices, don’t need to have globally unique addresses. Instead, they can have what are known as private addresses, which are only unique on local networks. Those private addresses can share a single unique address.

There are registries that provide the same kind of service a land registry does for real property. The key difference is that what is sold is not a piece of property but a right to registration. The registries introduced transfer policies a few years ago. Network operators agreed on transfer policies because accurate registration data is important to operations.

A Message from Our Sponsor

How to Take Advantage of Rising IPv4 Address Value: IPv4.Global specializes in helping clients sell, lease and buy IPv4. We help make the process less complicated and time-consuming by:

• Helping you find a buyer
• Leading you through the registry process
• Providing advice and expertise to reorganize your network

Contact us by calling (212) 610-5601 to speak with an expert for help turning your invisible asset into revenue.

By Lee Howard, Senior Vice President at IPv4.Global

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