Discovering a goldmine

Ask any organisation about its assets and they’ll no doubt tell you about their equipment, buildings, technology and intellectual property. Chances are that not many will talk about their unused IPv4 address. That’s because whilst many organisations may have this class of asset, they may not recognise it as such in their books or even know about it. But IPv4 addresses are in demand, and if you are holding unused addresses, they can in fact be a significant, and highly liquidable asset.

What is an IPv4 address?

An Internet Protocol is a system to uniquely identify and assign addresses to devices that are connected to the internet. It allows information to be sent via the internet between endpoints. Endpoints are, for example, a user device (laptop, PC, or other computer) or a website.

The first Internet Protocol to be actively used was IPv4. Under this protocol, addresses are written as four decimal numbers from 0 to 255, separated by a full stop. You may have seen the IP address for your laptop or PC, written, for example, as 172.127.1.2. Based on this format, IPv4 has 2³² – or roughly 4.3 billion – unique addresses.

The allocation of IPv4 addresses  

Addresses are managed globally by the Internet Assigned Numbers Authority (IANA) in conjunction with regional internet registries (RIR), who then allocate them to organisations. The RIRs included the Asia Pacific Network Information Centre (APNIC), the Réseaux IP Européens (RIPE) and the  American Registry for Internet Numbers (ARIN). In the 1990s, IANA and the RIRs allocated IPv4 addresses to companies and organisations that needed them most, such as universities, governments and telecommunication providers. They were distributed in IPv4 address blocks – up to 16 million at a time – meaning that the organisations who received them did not necessarily use all of the addresses that they were allocated.

4.3 billion addresses may seem a lot, however modern society’s dependence on internet connected devices have seen this number exhausted. There is no scope for any new IPv4 addresses, placing a value on those that are in existence but not actually in use.

IPv6

This issue of running out of IPv4 addresses was, of course, foreseen, and more than 20 years ago, a ‘new’ Internet Protocol was developed. This protocol, called IPv6, has a significantly larger number of unique addresses –  2¹²⁸ unique addresses in fact, or approximately 340 trillion trillion trillion. To put that into context, the size of the two version is contrasted in the table below.

IPv6 has considerable benefits over IPv4:

• The capability of peer-to-peer communication (which was actually the original intention for the internet, but was not part of IPv4). Under IPv4, data is transferred from a device through a data centre or carrier that then owns the information, creating a go-between that stores and uses information transferred. IPv6 has the potential to remove that go-between and create a network that transfers data and information directly from their own device to the intended recipient’s device without going through corporations like Google and Amazon.
• IPv6 can utilise the concept of blockchain to transfer money, messages and other confidential information. Again, this means that big corporations don’t hold payment information and transfers go from the sender’s account to the other party’s without the transfer going through a data centre owned by big tech companies

Side by side

The intention was that this new protocol would replace IPv4. But one significant factor has slowed down the adoption of IPv6, and means that rather than an all-out replacement, we have a situation where the two protocols now exist side by side.

That factor is that the two versions of IP cannot communicate with each other. Therefore new devices which are allocated an IPv6 address also need to have an IPv4 address to communicate on the internet to devices that only have an IPv4 address. So, despite the ‘new’ IPv6 having been deployed for over 20 years, IPv4 addresses are still the most dominant identification and location system, and address blocks continue to be in demand.

IPv4 addresses – a liquidable asset

So on the one hand there are no new IPv4 addresses to allocate, and on the other they are increasingly in demand to help facilitate the growth of IPv6 and its benefits. There are some organisations with surplus unused addresses, and others who need more addresses to support their growing networks.

The desire to get unused addresses back into circulation to meet demand has brought these two groups of people together to collaborate and trade, via specialist IP address brokers. Regardless of the size of the original IPv4 address blocks, they can be broken up, and IP address brokers can sell even small fractions of blocks. So for companies holding unused IPv4 addresses, they represent a valuable asset that they can liquidate.

The future for IPv4 vs IPv6 is uncertain and there are differing opinions on how the situation will play out. Some believe that organisations will wait for IPv4 addresses to naturally fall out of usage, whilst others see the increasing price of IPv4 addresses forcing the tech world into a faster adoption of IPv6 addresses. Some predict a shake up as early as 2025, but most sources don’t see it occurring until 2030 at the earliest.

IPv4 address blocks were allocated free of charge, so the recipients don’t tend to think of them as assets or carry them on their books. But the current situation is driving a growing awareness by organisations with unused IPv4 addresses that they could be sitting on a very valuable asset.