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

Internet Protocol version 4 addresses – commonly referred to as IPv4 – can be hard to come by these days, but they are essential for networking. As the demand continues to increase, but the limited supply is dwindling, buying a block of IPv4 has never been more challenging and expensive as it is today. Perhaps this is why the main question prospective buyers are asking themselves is whether or not they should buy IPv4 address blocks.

Is there an alternative? Instead of buying IPv4 addresses, companies across all industries now consider leasing. Although considered a mysterious and suspicious option in the past, today, IP leasing has proven to offer amazing advantages for companies that need IPs both short term and long term. So, is IPv4 leasing a game-changer in the industry? Can this option support both IP holders and companies in need of IP resources? How to lease IPv4 successfully? Let’s dive deep into the topic.

The term IPv4 address exhaustion defines the depletion of the available pool of IPv4 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 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 a limited supply of IPv4, they have implemented very strict IPv4 allocation policies. 

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.

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:

The scarcity of IPv4 addresses influenced the rise of the IPv4 address transfer market. In this secondary 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.

A business must meet its RIR’s policy requirements if it wants to obtain IPv4 blocks through a transfer. Regional Internet Registries that facilitate transfers have specific requirements and unique pre-approval procedures to ensure that buyers comply with transfer requirements. For example, one of the specific requirements is to justify the need for IP addresses. 

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. For example, on the IPXO Marketplace, verified IP lessees can lease within 5 minutes and bring the resources to any infrastructure within 24 hours. To sum up, a company that needs resources quickly, can benefit from leasing IPv4 blocks instead of buying.

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. In 2022, the average price settled at around $50. 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 $50 per IP, that would cost $51,200 upfront plus all the transfer fees. 

IP leasing proposes a more cost-efficient solution. The average IP lease price at IPXO – the world’s first fully automated IP lease and management platform – is around $0.50 per month on average. Every IP holder can set and offer competitive pricing, which further benefits IP lessees.

We must not forget another great advantage that leasing offers. Because you do not need to invest considerable funds upfront, you can use the additional savings for other essential investments. For example, your funds could go towards other areas of business growth.

When you buy an IP block, 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 purchase 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 as short as a month or two, or you can sign a Commitments agreement after negotiating a favorable lease term and prices.

IP sellers may not apply all security measures to protect buyers from such IP issues as IP blocklisting. Because not every seller may be capable of managing 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 could be, 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. In short, IP address abuse observability is a priority for us.

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.

Purchasing IPv4 addresses can be expensive and complicated. Why? For one, the IPv4 block transfer process is time-consuming, which may discourage buyers from buying IPv4 addresses if they want to scale their business fast. Furthermore, IP sellers usually transfer IPs to the highest bidder. Therefore, high prices may encourage a small or medium-sized company to search for other solutions.

IPv4 leasing offers benefits that 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/organizations can find IPs from all RIRs, search for resources by price, as well as negotiate custom lease conditions. For example, many companies need to lease resources without a long-term commitment. Most importantly, IP lessees can lease instantly without having to worry whether or not the resources are reputable.

Interested in giving IP leasing a try? Then register your free account today. Do you still have questions? Are you still not sure whether to buy or lease? Let’s connect and discuss the details! You can contact us and get expert advice by booking a demo.