Unlock Your Hidden Fortune
How Educational Institutions May Be Sitting on Valuable IPv4 Addresses in 2023
by IPv4 Staff
In recent years, the IPv4 address market has witnessed a surge in demand and value, with IPv4 address prices reaching historic highs. As the market inched ever closer to supply exhaustion, prices rose from an average of $10 in 2015 to an astounding $55 in 2022.
Even before the surge, IPv4 addresses were widely recognized as valuable intangible assets. However, with the average value now having increased fivefold in less than a decade, their significance and worth have reached entirely new heights in the modern digital landscape.
But here’s the thing. Because IPv4 addresses are intangible assets, many major institutions may inadvertently and unknowingly sit on a veritable treasure trove of unused IPv4 address blocks. Educational institutions in particular may find themselves in a prime position as potential sellers in the current market.
The question then arises: How have educational institutions come to possess vast reserves of untapped IPv4 addresses, potentially worth hundreds of thousands, if not millions of dollars?
In the Internet’s earliest days, the world wide web was not in the public eye. For the first decade or so, it was predominantly used as a research and educational tool.
As early adopters and pioneers of this technology, universities and research institutions were among the first to be assigned IPv4 addresses. Allocations of addresses were quite generous, with some institutions assigned class A address blocks with more than 16,000,000 IPv4 addresses each.
But why were they given so many addresses?
There were a few reasons for this:
- Limited foresight – The original creators could never have imagined how wildly popular the internet would be, nor could they have predicted the rise of IoT-connected devices. They didn’t think the original supply of 4.3 billion IPv4 would run out. As a result, address allocation was not nearly as conservative as it would be today, leading to universities receiving large blocks of IPv4 addresses.
- Classful address allocation – IPv4 addresses were originally allocated according to the classful addressing system, which lacked the flexibility and efficiency of the current system. Address blocks were assigned in one of three fixed sizes—small (256 addresses), large (65,000 addresses), and massive (16 million addresses)—leading to inefficiencies and over-allocation, particularly for large institutions.
What Can Universities Do With an IPv4 Stockpile?
Today, a great deal of IP address space remains dormant simply because too many addresses were distributed to some networks. Even major universities with significant network traffic and devices can’t hope to fully utilize every address in their stockpile.
Knowing that, instead of letting these address surpluses simply collect digital dust, many educational institutions have taken purposeful strides towards monetizing these intangible assets in order to finance both immediate needs as well as long-term projects.
Typically, most universities will have one of three available pathways:
- Sell the unused IPv4 addresses – Universities may outright sell IPv4 blocks, transferring ownership to the new buyer.
- Lease the IPv4 address – Universities may lease out unused IPv4 blocks, retaining ownership while also earning a passive income stream.
- Use IPv4 addresses as collateral for loans or investments – Universities may use these assets as collateral that backs a loan or investment. Naturally, the addresses could be seized in case of a default.
But how do they decide on what’s the best option?
Here’s how these paths stack up:
|Selling Unused IPv4 Addresses||Leasing IPv4 Addresses||Using IPv4 Addresses as Collateral|
|Financial Gain||One-time lump sum payment||Recurring income||Access to funds for loans/investments|
|Control Over IPv4 Addresses||Transfer ownership||Retain ownership||Retain ownership (risk of loss in case of default)|
|Flexibility||Limited (once sold, no longer owned)||High (can lease to different businesses)||Moderate (contingent on loan/investment terms)|
|Risk Level||Low (once sold, no further obligations)||Moderate (ongoing management and potential disputes)||Moderate to High (contingent on loan/investment terms)|
|Selling Unused IPv4 Addresses||One-time lump sum payment|
|Leasing IPv4 Addresses||Recurring income|
|Using IPv4 Addresses as Collateral||Access to funds for loans/investments|
Control Over IPv4 Addresses
|Selling Unused IPv4 Addresses||Transfer ownership|
|Leasing IPv4 Addresses||Retain ownership|
|Using IPv4 Addresses as Collateral||Retain ownership (risk of loss in case of default)|
|Selling Unused IPv4 Addresses||Limited (once sold, no longer owned)|
|Leasing IPv4 Addresses||High (can lease to different businesses)|
|Using IPv4 Addresses as Collateral||Moderate (contingent on loan/investment terms)|
|Selling Unused IPv4 Addresses||Low (once sold, no further obligations)|
|Leasing IPv4 Addresses||Moderate (ongoing management and potential disputes)|
|Using IPv4 Addresses as Collateral||Moderate to High (contingent on loan/investment terms)|
Why Are IPv4 Addresses Valuable?
While myriad factors impact IPv4 pricing, ultimately, IPv4 addresses are subject to the most basic of macroeconomic principles—the price movement falls in line with supply and demand. Supply has steadily approached exhaustion while demand has increased exponentially.
The reason for the supply crunch is glaring. In the early 2010s, the Internet Assigned Numbers Authority (IANA) depleted its pool of available IPv4 addresses that could be assigned to RIRs. Soon after, the other five Regional Internet Registries (RIRs) also depleted most of their entire stock.
Put simply, the supply is capped, with no new IPv4 addresses being created. In response, existing owners are less willing to part with these increasingly valuable commodities.
On the other side of the price equation is demand—it’s shot up. And, there are several factors that contributed to this precipitous rise:
- Increasing number of internet-connected devices – The rise of IoT devices and increase in the global share of adults with smartphones.
- IPv4 exhaustion – With fewer addresses available, competition over the remaining addresses heated up.
- Slow adoption of IPv6 – IPv6 was supposed to be the next step in the evolution of the internet, but adoption has been slow, largely due to the cost and complexity of upgrading networks and legacy devices to support IPv6.
- Growth of emerging markets – As developing and emerging countries become more connected to the internet and Western technologies, regions like Africa and Asia experience a surge in demand.