IPv4 vs. IPv6: Which Type of IP Address Benefits Businesses More?

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Click to learn more about author Vincentas Ginius.

When Internet Protocol (IP) addresses were created in 1981, nobody thought of running out of IPs. As technology started to scale at an unprecedented rate, it became clear that there wouldn’t be enough IP resources. How did it all begin?

Internet Protocol version 4 (IPv4) was first deployed in 1983 in the ARPANET, the predecessor of the internet. The reason we don’t hear about IPv1, IPv2, and IPv3 is that IPv4 was the first stable version. And what happened to IPv5? Since it was just an experimental real-time streaming protocol, IPv6 became the new standard.

What Happened to All IPv4 Addresses?

Increased use of internet services, broader application of IoT devices, and the COVID-related shift to remote work are just a few factors accelerating the transition to the new era of the internet. However, the current network architecture is falling behind the imposed expectations to support new-age integrations, leaving one to wonder if the gap will close up any time soon.

Starting from the 2000s, it has been a hard-fought battle for companies to acquire enough IPs to sustain and scale businesses. Out of the 4.3 billion IPv4 addresses in total, all are allocated. The major exhaustion happened in 2011 when all RIRs assigned their remaining address pools. 

What Is IPv6?

IPv6 was developed by the Internet Engineering Task Force (IETF) to deal with the long-anticipated problem of IPv4 address exhaustion. In December 1998, IPv6 became a Draft Standard for the IETF, and an Internet Standard on July 14, 2017.

The key differences are IPv4 is a 32-Bit IP address whereas IPv6 is a 128-Bit, IPv4 uses numeric addressing and IPv6 uses alphanumeric. IPv4 supports VLSM (Virtual Length Subnet Mask) and IPv6 doesn’t.

What Are Our Options Today?

Despite the shortage, the majority of the internet still uses IPv4 addresses. This is possible because an ecosystem of IPv4 addresses was created. With IPv4 IPs being recycled and reused, a relationship between private companies and RIRs was formed. Nowadays, a large part of IPv4 addresses is held by industry giants. While small to medium-sized businesses (SMBs) are struggling the most, all companies are affected. So, what is the next step?

Since IPv4 isn’t compatible with IPv6, the rationale for transition is either the lack of IPv4 address space or the required use of new features in IPv6, or both. IPv6 requires 100% compatibility for the existing protocols. Transitional technologies are needed for them to work together. These include Dual-Stack Routers, Tunneling, and NAT Protocol Translation. Dual-stack technology allows the use of both types of IPs, as IPv4 networks cannot communicate with IPv6 networks and vice-versa. For the last decade or two, we were trying to make IPv4 more efficient rather than transitioning to IPv6, and it shows. The Network Address Translation (NAT) method of mapping IP addresses was created to mitigate the shortage problem. While commendable, it came with its own shortcomings, notably slowing down network performance and the loss of end-to-end addressing. Is this really the answer?

How Businesses Globally Can Benefit By Staying with IPv4

First, let me explain why an updated protocol, IPv6, with a virtually infinite number of IPs will not solve the shortage problem. Having a lot of unused IPv4 resources just waiting to be exploited is not ideal when they could bring extra revenue to the holder and allow SMBs to scale their operations. There is a solution for the shortage; however, it’s not IPv6, which might seem like an obvious pick. 

What we can do is create a sustainable IP address marketplace where the IP holder can monetize unused IPv4 resources without worrying about the abuse of IPs using existing IPv4 resources. And businesses can lease IPs without committing to high CAPEX. IPXO aims to undertake the daunting task of RIR unification, making every IP address equal for all users of the platform, regardless of the region the IPs come from a single centralized solution for all IP resource needs, with dedicated teams working to ensure abuse prevention, smooth transition of IPs between parties, and plenty of opportunities to either make more revenue or scale businesses. 

What Are IPs Worth?

A decade ago, IP addresses were around $5, but when IANA allocated the last block of IP addresses in 2011, that changed. With less than 4% of the world’s supply of IPv4 addresses available for allocation and many companies looking for IP addresses to expand their businesses, IP addresses prices will skyrocket. Experts predict that IPv4 prices will likely increase by as much as 100% within the next five years. Each IPv4 address is worth more than $30 apiece today. Therefore, it’s worth examining IPv4 transfer and lease prices to determine whether buying IP addresses is still the way to go.

Large blocks of IP addresses are still in the hands of large corporations, such as the USPS, Google, Hewlett-Packard, and Xerox. Now, such companies often appear as sellers, as they’ve been allocated far more IP addresses than they needed in the early days of the internet, when the classful network allocation method meant inefficient IP address block distribution.

Today, there are more than 820 million unused IPv4 addresses owned by large corporations that, for the most part, aren’t doing anything with them. Yet many new and expanding companies that need IP addresses are struggling to acquire them.

What Makes Leasing Attractive?

Buying IPv4 addresses is an expensive proposition, but leasing offers a cost-efficient solution for companies looking to grow their global presence. Leasing doesn’t require changing the ownership, so it is a faster and more efficient way to acquire IP addresses. Furthermore, you can determine the lease period, which can be from a month to several years, which makes leasing a cost-effective solution. What’s more, there’s a chance that you will be offered a lower price.

By leasing IP addresses instead of buying them, businesses can conserve large amounts of financial resources. The costs of owning IPv4 addresses make leasing a more attractive option to meet your IP resource requirements at a low price. Leasing IPv4 addresses also minimizes the risk of getting blacklisted IPs due to abuse or spam.

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