What Is an IPv4 Broker and Why Are They Important?
by IPv4.GLOBAL Staff
When the Internet was originally designed, its creators didn’t imagine how wildly popular it would become. As such, they allotted 4.3 billion unique, 32-bit IPv4 addresses—a figure they assumed would be more than adequate to accommodate all potential users.
They were incorrect. And now, in the wake of IPv4 exhaustion, demand continues to greatly outpace supply.
This scarcity created a budding yet frictional IPv4 market. While there were certainly interested buyers or sellers, there existed a lack of transparency regarding market participants, transfer protocols and legal issues. This made it difficult for the two parties to identify one another and then complete a transaction.
Thus, IPv4 brokers emerged. These knowledgeable intermediaries acted as the digital middleman, connecting buyers with sellers and facilitating the legal transfer of the address.
But what do these brokers do? And why would a company enlist their services?
A company may seek to acquire an IPv4 address block to obtain new internet connectivity, expand internet capacity, create a bigger network, replace exhausted addresses, or obtain a specific block of addresses for enhanced security.
Internet Protocol (IP) addresses are unique numerical identifiers assigned to every device connected to a computer network that uses the Internet Protocol for communication. Other network devices use the IP address to identify, locate, and communicate with that machine.
There are currently two versions of IP addresses in general use: IPv4 and IPv6.
- IPv4 – The first widely-used Internet Protocol, it uses a 32-bit address with a total address cap of 4.3 billion available identifiers. As the demand for internet connectivity has increased over time, the pool of available IPv4 addresses has dwindled, and it has become increasingly difficult for companies and organizations to obtain new IPv4 addresses. (See “IPv4 Waiting Lists”)
- IPv6 – The newest Internet Protocol, it uses 128-bit addresses and can support a much larger number of addresses, approximately 340 undecillion. Although this is still a technically finite amount of available IP addresses, the number allowed is so large that this has effectively solved the shortage caused by IPv4 exhaustion.
But with so many more available IPv6 addresses, why would a business opt for purchasing an IPv4 address instead of the newer protocol?
Three reasons, in particular, stand out:
- Compatibility – Because IPv4 is the most widely-used version of the Internet Protocol, and many legacy devices and infrastructure are only compatible with IPv4, it may be too cost-prohibitive and burdensome for a company to make the switch. If a company wishes to expand their network infrastructure which is made up of IPv4 addresses, they avoid a lot of headache by acquiring and utilizing more IP addresses of the same format.
- Cost – If a company wishes to switch over to IPv6, there are variable costs involved with the migration. Retraining employees, backwards compatibility maintenance, and ultimately time are some major deterrents when it comes to converting networks to IPv6.
- Performance – Although IPv6 was designed to be more efficient and feature-rich, depending on a company’s network design, infrastructure, and specific applications in use, there may still be certain circumstances where IPv4 provides a business with superior performance.
Today, universities are one of the largest sellers of IPv4 addresses.
At the outset, the Internet was thought to primarily be a research and educational tool, so colleges and universities were allotted tens of thousands of IP addresses, despite only needing and using a small fraction of these.
But these weren’t the only entities that acquired large pools of IPv4 addresses.
For instance, early adopters were able to acquire large pools of addresses at a time when they were both free and easy to obtain. Alternately, some companies have acquired large numbers of IPv4 addresses as part of mergers or acquisitions.
Whatever the reason, situations such as these created an imbalance in IPv4 distribution, which made these IPv4 addresses more valuable to the owners. Now, a company may find itself with extra blocks and looking to sell for one of several reasons:
- To make a profit – Scarcity combined with speculation has led to a skyrocketing of IPv4 address valuations. Hank Weiss and Charles Abramsom noted this price fluctuation in an Educause article, stating: “Single addresses that exchanged hands for $20 in 2019 are available for as much as $60 in 2022.” By selling a portion of its addresses, a business may be able to raise capital to invest in other business activities.
- They’re not being used – As mentioned, there are countless organizations that have large pools of extra IPv4 addresses that are sitting around unutilized, gathering digital cobwebs. And, because many universities are sitting on 65,000 addresses, a sale could result in millions of dollars that could be used elsewhere.
- To transition to IPv6 – Some businesses may decide that it would be beneficial to make the switch to the newer Internet Protocol. As such, they would no longer need to retain their legacy IPv4 addresses.
Companies can review the price fluctuations of IPv4 addresses to confirm whether now is a good time to buy or sell. November 2022 data, for example, showed that prices since 2019 are still up substantially.
A broker acts as the essential lubricant for the frictional market, greatly streamlining the previously-cumbersome process of pairing buyers and sellers together.
A top broker will provide reliable and transparent information and services, partnering with a business to buy and sell IPv4 blocks. Ideally, they’ll be able to facilitate transactions of various IPv4 block sizes, ranging from smaller online transactions to much larger private transactions.
For instance, at IPv4.Global, we offer a multi-tiered platform in addition to private brokerage services:
At the online marketplace, participants can buy, sell, or lease IPv4 addresses. The address blocks are auctioned off to the highest bidder or made available for a fixed “buy now” purchase price.
How does the sale take place? IPv4.Global provides a fast, easy, and secure five-step process:
- Payments placed in escrow – The buyer deposits the full purchase price into escrow.
- Transfer request – The seller initiates the RIR transfer of the IPv4 addresses to the buyer, who also submits a request.
- RIR review – The parties work with the RIR(s) to approve the transfer.
- Addresses transferred – The IPv4 address block(s) are transferred into the buyer’s account on the RIR database.
- Payment released to the seller – Upon confirmation, the escrow funds are released to the seller.
Private sales will go unlisted on the online market. IPv4.Global can provide privately negotiated transaction services via phone for an anonymous buyer, which includes:
- A completely confidential sales process
- Total transaction documentation and record keeping
- Deal structure guidance
- Escrow services
- Facilitation of IP address transfer according to the RIR
Partnering with IPv4.Global
Whether a business is looking to buy, sell, or lease a series of IPv4 addresses, IPv4.Global can broker to make that happen, acting as matchmakers, market analyzers, contract negotiators, transfer assistants, and legal guides.
With more than 55+ million addresses brokered, and $800 million generated for our clients since 2014, we have completed more IPv4 sales than any intermediary in the world.
Whether a client wishes to utilize our online IPv4 auction marketplace or take advantage of our private brokered solutions, we are the destination for IPv4 sales.
Contact us today if you’re in the market to buy, sell, or lease IP addresses.