As advisors in the niche area of digital names and addresses, one of the key issues that we live with here at FairWinds is scarcity.  One form of scarcity is in .COM domains names; for example, there’s just one, just one, just one, etc.  While this poses a significant challenge for many, from start-up entrepreneurs to strategic multinationals, there is another form of Internet-related scarcity that is quickly becoming a much more prominent issue.  We are rapidly running out of IPv4 addresses.

The “IP” in IPv4 refers to “Internet protocol” – every device that connects to the Internet has an IP address, from the laptop you’re reading this blog post on, to the router that links your laptop to the Internet, to the servers that host your website, to the PayPoint your barista swiped your credit card on at the coffee shop this morning.  IPv4 is the version of the protocol on which we are currently operating.  The problem is that it is only 32 bits wide, meaning the total possible number of binary addresses is 2^32, or approximately 4.3 billion.

Back when IPv4 was invented, this was believed to be more than enough addresses, given that only a few institutions were connected to the Internet.  But when the World Wide Web was invented in the 1990s and became all the rage, it became clear that the IPv4 addresses would run out much sooner than initially thought.

When the Internet was in its infancy, there was no regulation to how IP addresses were allocated, and as a result, many organizations that requested IP addresses in the 1980s received far more than they may have needed.  But in the style of “waste not, want not,” they became accustomed to using all the addresses they had been given.  It wasn’t until the Internet Assigned Numbers Authority (IANA) took over the allocation of IP addresses that the process became formalized.  IANA operates under ICANN (domain names, after all, are just easy-to-remember alpha-numeric representations of IP addresses), and distributes IP addresses to five Regional Internet Registries (RIRs) around the world.  The RIRs then distribute them to Internet Service Providers (ISPs) and other entities that require them for a wide range of Internet-related activities.  Experts have been predicting that IANA will run out of IPv4 addresses very soon; a PCWorld article published Monday reports that IANA has in fact reached this point and will distribute its last five blocks of IP addresses over the next few days, one block to each of the five RIRs.  (A “block,” sometimes referred to as a “/8” or “slash-8,” contains approximately 16 million IP addresses.)

Once the RIRs deplete their last blocks, any organization that applies for new IPv4 addresses will not be able to get them because there simply will be none left to give, period.  This scarcity will add costs to building new businesses, as well as expanding old businesses, either through network restructuring or through the acquisition of addresses through market transactions.  In other words, the scarcity is going to create an obstacle on the path to growth.

But luckily there is hope, in the form of IPv6, IPv4’s bigger, faster, stronger, 128-bit upgrade.  For those of you trying to do that math in your head, 128 bits translates to 2^128, or about 340 billion billion billion billion, IP addresses.  In other words, an enormous amount – enough to support all the Internet-connected devices we can dream of, and even some we haven’t been able to dream up yet.  As Martin Levy of Hurricane Electric has said, “more than four quadrillion addresses for every star in the observable universe.”

Unfortunately, IPv6 is not all roses and lightening-fast smartphones.  The main issue with the new version is that it is not back compatible with IPv4.  That’s like buying a new generation of a video game console and not being able to play your old games on it.  In order for IPv6 to play nicely with IPv4 devices, a lot of extra steps need to be involved, which ultimately harm the user experience.

Moreover, the transition from IPv4 to IPv6 will be extremely costly and will most likely take years.  In my opinion, just like the IANA has underestimated the cost and complexity IP address holders will face in remapping and freeing up space within their own networks, IANA has also underestimated the cost and complexity of transitioning from IPv4 to IPv6.

Some places where IPv4 has been scarce from the start (China, for example, has only one IP address for every 4 people) have already begun pushing rapid IPv6 adoption.  Here in the U.S., we’ve had more IPv4 addresses than any other country in any region, and thus have not felt as much pressure to make the switch to IPv6.  But time is running out for us as well.  The American Registry for Internet Numbers (ARIN), the RIR that allocates IP addresses to North America, wants all websites that face the public to be ready to support IPv6 by next January.

There’s a long road ahead of us before everything is switched over to IPv6.  It won’t be easy and it won’t be cheap, but at this point, it’s the only way to continue to move forward.

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