4 August 2022 | 5 min read

Buying IPv4 Addresses: Is It the Best Option for Growing Companies?

Discover why buying IPv4 addresses is an outdated solution and what the best alternative available right now is.

A shopping cart full of IPv4 addresses with coins around them.

Are you looking to purchase a block of IPv4 – Internet Protocol version 4 – addresses? Perhaps you are already searching for sellers that would offer competitive sale prices? You may find exactly what you’re after for sale, but is buying IPv4 addresses the best option available?

Fortunately, IP buying is not the only solution – IPv4 leasing has proven to be a game-changer in the industry. The IPv4 leasing market offers companies to acquire internet resources and support their business operations in a more sustainable way. Continue reading to learn more about why IPv4 leasing is better than buying. 

What is IPv4 exhaustion?

The term IPv4 address exhaustion defines the depletion of the available pool of IP addresses. The fourth version of the Internet Protocol provides 4,294,967,296 unique addresses that no longer satisfy the growing demand. This is because the number of internet users and online devices has grown exponentially since the introduction of IPv4 in 1981.

Unfortunately, businesses today cannot freely acquire IPv4 addresses from the Regional Internet Registries (RIR) to expand their networks. Why? The organization responsible for the distribution of IPv4 addresses – the Internet Assigned Numbers Authority (IANA) – assigned the last IP blocks to the RIRs in 2011. As RIRs now have limited supplies of IPv4, they have implemented very strict IPv4 allocation policies. 

Line graph representing the IPv4 exhaustion among all five RIRs.
IPv4 exhaustion throughout the years

Another version of the Internet Protocol – IPv6 – came to the rescue offering 340 trillion trillion trillion unique combinations – more than 100 times the number of atoms on the surface of the Earth. In theory, it is unlikely that we would ever run out of IPv6 addresses.

However, due to its pricey implementation and hardware limitations, global IPv6 adoption is slow. As a result, organizations and businesses must rely on IPv4 addresses, which have become a scarce commodity. This has paved the way for secondary markets, in which internet numbers are leased or bought.

Why is buying IP addresses an outdated solution?

Not every business wishing to buy IP addresses knows of other options available. IPv4 leasing emerged as an alternative to IP address buying. But is IP lease better than IP purchase? Let’s discuss this from a few different perspectives.

IP address transfer process

The scarcity of IPv4 addresses influenced the rise of the IPv4 address transfer market. In this market, organizations can transfer their unused resources to other institutions or businesses that need them. 

Those who want to transfer or receive IPv4 blocks have to contact a RIR directly or use IPv4 broker services. However, transferring the rights to IPs is a long and complicated process

Businesses must meet the RIR’s policy requirements if they want to obtain IPv4 blocks when they request a transfer. Regional Internet Registries that facilitate transfers have unique pre-approval procedures to ensure that buyers comply with specific requirements. For example, one of the conditions is to justify the need for IP addresses. 

Four people around a table discussing IPv4 allocation.
RIRs allocate IPv4 resources only if companies can justify the need

The pre-approval process may take a few days; however, the entire transfer process may take two or three weeks. Also, RIRs may apply transaction fees to the seller and the buyer depending on the size of the block being transferred. For example, the transfer fee for the IPv4 address space starts from $500 at ARIN – the American Registry for Internet Numbers. 

In contrast, leasing is a simpler process that may take only a few days. Therefore, a company that needs resources quickly, should consider leasing IPv4 blocks instead of buying.

Pricing

If you consider buying IPv4 address blocks, you may need a small fortune to purchase them. Prices for IPv4 transfers have increased from $24 per IP address at the end of 2020 to $55 per address in December 2021. Therefore, if your company needs a lot of IPs, you would need to pay a lot of money upfront. Let’s say, you need a /22 block, which contains 1,024 IPs. At an average price of $55, that would cost $56,320 upfront plus all the transfer fees. 

Undoubtedly, IP leasing offers a more cost-efficient solution. The average IP lease price at IPXO – the world’s first fully automated IP lease and management platform – was $0.52 per month in July 2022. You can use our Leasing vs. Buying Calculator to compare the leasing and buying prices of IPv4 address space if you are still not sure whether to transfer or lease your IPv4 address blocks.

We must not forget another great advantage that leasing offers. Because you do not need to invest a lot of money upfront, you can use the additional funds for other essential investments.

A scale represents how buying IPv4 is much more expensive than leasing IPv4.
Buying IPv4 requires a significantly larger investment upfront than leasing IPv4

Commitment

When you buy IP addresses, you acquire valuable resources that allow you to extend your business’ network. Also, you may have the opportunity to turn your assets into profit if you decide to sell them at a higher price in the future once you no longer need them.

However, when you buy a lot of IPs, you need to take into account the resources required to manage a large inventory of IPv4 blocks. If managing IPs becomes too time-consuming and costly, buying IPv4 may be a long-term commitment that simply does not pay off. 

On the other hand, when you lease IPv4 address blocks, you enter into a fixed-term agreement. This might be a better alternative if you don’t want to lease long-term or buy IPv4 blocks. For example, you can lease for a year and terminate the agreement if you no longer need the assets. Of course, if your lease term expires after a certain period, you can renew it if the IP holder offers the opportunity.

IP reputation and protection

IP sellers may not apply all security measures to protect buyers from such IP issues as IP blocklisting. Because not every seller may manage their blocks of IPs efficiently, they may be unable to track the use of each internet address and ensure that it is used for legitimate purposes. As a result of that, a potential buyer may purchase blocklisted IPs that are, practically, unusable.

At IPXO, we take IP reputation seriously. Our Abuse Prevention team performs daily checks to ensure that all IPs placed on the Marketplace are clean. Also, we screen our clients, both IP holders and lessees, thoroughly to guarantee that IPs are valid and safe to use in any network or infrastructure before they are added to the Marketplace.

IPXO IP reputation and abuse experts are monitoring IP addresses.
IP reputation and protection are key focus areas at IPXO

To increase the security further, IPXO implements the Resource Public Key Infrastructure (RPKI) that secures Border Gateway Protocol (BGP) routing and helps prevent IP hijacking. In other words, RPKI verifies that IPXO lessees pay only for valid IPs held by reliable holders.

The best option for your needs

Purchasing IPv4 addresses can be expensive and complicated. Why? For one, the resource transfer process is time-consuming, which may discourage buyers from buying IPv4 addresses if they want to scale their business fast. Therefore, high prices may encourage clients to search for other solutions.

Luckily, IPv4 leasing can support business growth quickly and cost-efficiently.

The IPXO Marketplace offers affordable IPv4 block leasing for clients that need them. Small and medium-sized companies can lease resources without a long-term commitment. Moreover, we ensure that only reputable IPs are put up for lease.

If you need expert advice or more details about the leasing process, do not hesitate to book a demo and see the platform in action. If you are still not sure whether to sell or lease, let’s connect and discuss the possibilities!