What is IPv4?

IP addresses

Internet Protocol (IP) addresses are the numbers identifying the interfaces that send and receive internet data. Every phone, tablet, and laptop will use at least one IP address when connected to a network.

The same is true for the services they connect to and the infrastructure that carries the data. Each server needs an IP address, as do the routers and switches that connect them.

First and most widely deployed version

IPv4 is the first version of the Internet Protocol. Despite being developed and deployed in the 1980s, it still dominates. More than half of all the internet traffic Google sees uses IPv4 in March 2024.

IPv6, the new version of the Internet Protocol, carries a significant proportion of traffic. But IPv4 will continue to be relevant for years to come. You can read more about IPv6 at ipv6.com.

IPv4 has a 32-bit address space. That means just over 4 billion addresses were possible using the format. Some of these addresses are reserved for things like private networks and one-to-many multicast use. This brings the number of addresses available for ordinary internet use down to 3.7 billion. That is less than half an address per person on the planet.

Early adopters

IPv4 was adopted when computers were very expensive. This meant there were very few users. The iconic PDP-11 minicomputer only sold about 170,000 units between the 1970s and 1990s. IBM’s PC was introduced around the same time as IPv4 and cost $1,565 each ($5,342 in 2024 dollars). In contrast, in 2024, a budget smartphone is available for under $500.

This meant that IPv4 addresses were – relative to the number of devices in use – both plentiful and free. The shortage was the computers to use them.

So, engineers saved money on the specialist computers used to direct internet traffic by just having three sizes of network.

• Class A networks were big and got 16 million addresses
• Class B networks were medium and got 65,536 addresses
• Class C were small and got 256 addresses

When an organization needed several Class Cs, they’d get a Class B. And those that needed lots of Class Bs might get a Class A.

Oversupply and Under-supply

An organization that needed 5,000 IPv4 addresses might have been allocated a Class B – known as a “/16” today. This was administratively better than managing 20 or more Class Cs, now known as “/24”s.

But even with substantial growth between then and now that organization could be using fewer than half of those 65,536 IPv4 addresses. Meanwhile, many new organizations struggle to get any addresses because the pool of unallocated addresses has run dry.

Markets are effective at moving resources where they are most needed. The communities that manage the policies governing the distribution of IP addresses have developed transfer policies. These allow organizations with excess to transfer it to others who need it.

Efficiency

IPv4 remains relevant but organizations need to make every address count. AWS charges almost $44 per address per year if it is used continuously. So, address compression technologies like NAT and CGNAT can lower costs.

Another is IPv6. Lots of internet traffic can use IPv6, as can internal networks. Deploying IPv6 can help you reduce the amount of IPv4 traffic you send and receive. And that means you might not need as many addresses.

Unique versus private

Not all IPv4 addresses are unique.

Unique IPv4 addresses are needed to send data over the internet. If those addresses were not unique the traffic might go to the wrong place. But data sent across a private network does not need globally unique addresses. So, three blocks of IPv4 addresses are reserved for use on private networks.

They are:

• 10.0.0.0/8 – a block of 16 million addresses
• 172.16.0.0/12 – a block of 1 million addresses
• 192.168.0.0/16 – a block of 65,563 addresses

Private networks can all use addresses from these reserved blocks internally. Then, an address translator at the edge can rewrite addresses in data packets. Techniques like this allow multiple devices to share one unique address. This expands the number of people those 3.7 billion IPv4 addresses can serve.

CIDR Chart

The early internet only supported three sizes of network. The modern internet supports lots of different network sizes. This is done using a technology called Classless Inter-Domain Routing, or CIDR.

The smallest network likely to be usable on the internet is a /24 (256 addresses). But a network could use 512 addresses instead. This would be a /23. This chart shows the full range of CIDR network sizes available.

Fig 1: Networks sizes and CIDR notation