Digital Real Estate: An Introduction to IP Addresses

Jason Holmes

IP addresses have become a valued commodity across the world. Due to the newfound scarcity in supply, a new market in IP address leasing and transfers has emerged to satisfy the growing demand.

Early Background
The modern Internet began with the U.S. Department of Defense’s technology research via ARPA (Advanced Research Projects Agency) leading to the development of ARPANET, the first major packet switching network. This network, which transmitted data via regulated size blocks (packets), sent information between connected nodes via the Internet Protocol (IP) system.

When originally designed, this protocol’s architecture allowed for approximately four billion IP addresses – specific numbers that identify users within the network; a virtual address. An IP address is essentially the Internet’s version of a home or business address, necessary for receiving data, like an address is necessary to receive physical mail or packages. These addresses were a byproduct of IPv4, the Internet Protocol’s fourth iteration, derived from 32-bit binary number combinations.

Supply and Demand
Given the vast supply of IPv4 addresses originally available, it was assumed that the supply would not be exhausted by demand. In turn, these addresses became managed by the five Regional Internet Registries (RIRs), which control IP address allocation across the world. At first, addresses were provided to companies in bulk for a set membership fee.

However, with the Internet’s explosive growth in both users and connected devices, by 2012, nearly all RIRs had exhausted their allotments. With approximately 7 billion people on the planet, and only 4 billion available numbers, the demand led directly to the birth of a new market – IP address leases and transfers.

Birth of a Market
To add additional numbers, the IPv6 protocol was developed in the late 1990s. Using 128 bit, hexadecimal combinations for number creation, IPv6 provides 340 undecillion (3.4 x 1038) new numbers. However, because of beta testing and the sheer volume of devices and software requiring conversion, IPv4 to IPv6 adoption has been slow.

As of 2014, the adoption rate is less than 5% of global users. In the meantime, companies still require IPv4 addresses to connect online to conduct business. Thankfully, an abundance of previously registered addresses remain untapped for a price.

Whether to Buy or Rent IP Addresses
A variety of companies currently hold a limited cache of unused IP addresses, registered when numbers were abundant and free. Servicing this new market, dedicated IP brokers and firms offering IP broker services like Pub Concierge help facilitate transfers, by matching buyers (new companies needing addresses) to sellers, and managing the transfer process in a highly structured and productive capacity. Companies can purchase the right to use an IP address, in which the original registrar informs the associated RIR that it is transferring over its right of usage. Brokers assist by performing administrative duties and aiding negotiations for a set commission.

Additionally, companies interested in, but needing time to adapt to IPv6, can instead rent the right of usage for IPv4 addresses. Companies like Pub Concierge lease and facilitate the use of distinct IP addresses for a specified period of time. This option provides companies the ability to still grow, without making a long-term commitment to real estate. It is a similar decision to renting vs. buying an office building for the growth of a company or to buy vs. rent a house, personally. The business needs dictate the price, duration, and flexibility of IP address needs and Pub Concierge can either service an immediate need or a longer-term solution.

Either way, the IP address digital real estate market has efficient and valuable profit potential for companies utilizing digital real estate resources. Companies like Pub Concierge, who recognize the importance of this adoption gap and how companies must continue conducting business online, while adapting their long-term capabilities to do so, help to facilitate a transparent and highly efficient market.

Digital Real Estate: An Introduction to IP Addresses is Part 1 of a 3 Part Series on Digital Real Estate published by Madrivo.

Read Part 2: Digital Real Estate: IP Address Sale, Transfer, and Rental Pricing

Contact Information:
Contact: Daniel Stan
Skype ID: sales.pubconcierge
Phone: +1 (702) 425 4314

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