Trading IPv4 addresses: part 1 – the basics

In early 2011, technology media began to write about a very significant development. At that time, the last blocks of IPv4 addresses were definitively exhausted by IANA, the top-level domain registry (a globally operating organisation that oversees the allocation of IP addresses, the management of the root zones of DNS, the definition of media types for MIME and other requirements of internet protocols). Experts had been talking about this event for some time, but it was not possible to estimate the exact date. In today's article we will explain what IPv4 addresses are, what is replacing them, and also describe some basic terms relating to this issue. In the following articles we will look in more detail at the individual aspects of the exhaustion of IPv4 addresses, as well as the transition to IPv6.

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IP and IPv4

IPv4 addresses are 32-bit, while IPv6 addresses are 128-bit. In this case, IP stands for "Internet Protocol", the protocol with which all devices connected to the internet in some way communicate. The "magical transformation" of an IP address into a domain name takes place thanks to the Domain Name System (DNS). IPv4 is the name for the fourth revision of IP. It is a data-oriented protocol that carries data without any guarantee of delivery. The IPv4 protocol provided an address space for roughly four billion addresses, and this capacity was exhausted – that is, the last blocks were allocated – in early February 2011. IPv4 addresses are divided into three basic parts: the network number, the subnet number and the network interface number. Among other things, these numbers can also be used to identify where an IP address is located in the world. You can find out your IP address, for example, at this address: https://www.mojeip.cz/.

What does the exhaustion of IPv4 addresses mean?

In early 2011, the Ministry of Industry and Trade (MPO) also warned on its website about the approaching exhaustion of IPv4 addresses, and at the same time pointed out the need to introduce the IPv6 protocol in good time, which offers a substantially larger address space – IPv6 addresses are 128 bits long, while IPv4 addresses are 32 bits long. The available IP addresses are managed by the organisation IANA (Internet Assigned Numbers Authority), together with five regional internet registries (RIRs). Each of these regional registries received just under 17 million IP addresses from IANA. IANA exhausted all its IP addresses on 3 February 2011, but that did not yet mean global exhaustion, because the individual regional registries still had a certain number of IPv4 addresses available for allocation. In May 2011, the address pool of the APNIC registry for the Asia-Pacific region fell to its last block, and in autumn 2012 the supply of addresses in the RIPE NCC registry (for Europe) also fell to its last block. Both registries moved to a strategy under which they began allocating 1024 IPv4 addresses to each member, in order to delay their complete exhaustion as much as possible and create the time reserve needed for a gradual transition to the IPv6 protocol. The approaching exhaustion of IPv4 addresses had one more inevitable consequence. These addresses became a highly tradeable commodity, because where there is demand, there is logically also supply. Almost half of all IPv4 addresses are not used, and are held by large multinational companies. At first, large blocks of numbers were allocated and their use or need was not checked. That is why the transition to IPv6 is relatively slow – big business has enough free addresses. Under normal circumstances, if an entity stops using an allocated IPv4 address, it should return it. However, there is no mechanism that would somehow "force" the owners of IPv4 addresses to return them. Many entities prefer to sell, because they can either make a profit from it, or at least use it to cover certain costs. Some members of the registries mentioned above also began to request IPv4 addresses that they then distributed further, but not to key customers. In other words, they did not use these addresses for themselves, their customers and their needs. The operators of infrastructure and services themselves learned to minimise their need for IPv4 addresses by using so-called NAT, Network Address Translation. Within their own network, they create many subnets in which they can use essentially unlimited private IPv4 address ranges, which use one public, scarce IP address to connect to the worldwide computer network. So 1024 allocated IP addresses are enough even for a fairly large regional operator to serve tens of thousands of connected households. Restrictions for the customer may arise when they need direct connections using VPN lines, but most solutions today use a VPN server, which solves the problem satisfactorily. However, the IPv4 protocol is not suitable for large internet of things solutions – here, the transition to IPv6 is the only solution.

The IPv6 protocol

The ideas of a kind of black market in IPv4 addresses, or fears that you will be spammed by emails offering these addresses instead of a miracle blue pill, are exaggerated. Since the number of IPv4 addresses was not unlimited, it is clear that the next natural step is a gradual transition to a new protocol, which will also better meet the growing demands of today. The successor to IPv4 is version 6 of the internet protocol, i.e. IPv6. With its arrival, the IT world can look forward to a substantial expansion of the address space, along with the ability to transfer data at high speeds. Some older network devices, however, are not compatible with IPv6. For these devices, it will be necessary to use transition mechanisms or translators between the two protocols. The IPv6 protocol has its roots in the 1990s, when the IETF committee issued a requirement to set up working groups to define and create the internet protocol of the next generation. In February 1999, the IETF committee founded the IPv6 Forum, whose members were responsible for coordinating the worldwide deployment of the new protocol. 8 June 2012 became World IPv6 Day, with the aim of testing and promoting the public deployment of the IPv6 protocol. Apart from a significantly larger address space, the IPv6 protocol offers stateless automatic address configuration, higher security and other advantages.

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Updated 20 March 2024