What is exactly an IP address? The term is the short for Internet Protocol Address and it is the logical address of a network adapter. IP corresponds to the network layer (layer 3) responsible
for end-to-end (source to destination) packet delivery. It works with TCP (Transmission Control Protocol) which deals with the transporting the packages. The term TCP/IP is used when referring to both of the protocols and makes possible network communications where TCP transport is used to deliver data across IP networks.
The concept is pretty easy to understand if you come to think of it. In order to communicate to another computer, you need an address (IP) and means of transportation of the data (TCP).
An IP address can be either private or public. Private addresses are assigned to computers in a LAN (Local Area Network) while public ones are used for the Internet or WAN (World Area Network). All the private IPs are communicating outside the local network through a public IP that is the gateway (the door to the Internet and WAN).
To make an idea on how important are IP addresses, you should know that network routers, web browsers, IM applications, mail clients rely on IP and other network protocols layered on top of the IP. This means that without an IP, there is not much to do. The IP technology started in the '70s and its purpose was to support the first research computer networks.
Nowadays, there are two IP technologies available. IPv4 is the version all home computer networks are currently using. Ipv4 consists of four bytes (32 bits) and for readability purposes, we work with addresses in a notation called dotted decimal. The range of addresses is from 0.0.0.0 to 255.255.255.255. This means that between each of the four numbers comprising the IP address, there will be a dot. The maximum number of IPs given by version 4 of the Internet Protocol is of 4,294,967,296 addresses. For some of you, it may seem large enough to cover today's requirements. However with the continuous expansion of network capabilities of all sorts of mobile devices, the demand will grow and v4 will become insufficient.
A couple of solutions have already been found for increasing the number of possible addresses. Developing IPv6 is one of them. The improved version will use 16 bytes addresses (132 bits) and this translates into an increased number of available IP addresses for the users. The total augmentation will reach 300,000,000,000,000,000,000,000,000,000,000,000,000. That should cover our needs for the next few years (the space is sufficient to cover 1030 addresses per person on the planet).
Another method also based on IPv6 is adding an extension of IPv4. This way, the IP address will consist of a combined notation (the last two bytes pairs in the right will be written in the normal IPv4 dotted decimal notation).
IPv6 or IP Next Generation (IPng) has several advantages compared to IPv4. Scalability is one of them (IPv6 has a 128-bit address while IPv4 has a 32-bit address). The next Generation Internet Protocol version comes with built-in security of the source). The “plug and play” mechanism featured by IPv6 eases the connection of equipment to a network, no manual configuration being needed or through DHCP servers.
The current solution adopted for extending the IP addresses is NAT (Network Address Translation). This is a networking protocol that allows LANs to be set up using a single public IP. It allows setting up a LAN with no special configuration of the Internet connection. Adopting this solution permanently is not too good of an idea as some peer-to peer applications will not work properly if NAT is being deployed in a network.
Also, multimedia applications (video conferences included, VoIP) cannot be used on NAT enabled devices as the protocols of these applications use UDP with dynamic allocation of ports and NAT does not provide the necessary support.
Addressing and routing hierarchy is also improved in the soon to be new IP standard. A larger address space allows allocation of larger address blocks to the ISPs (Internet Service Providers). This way, the ISP can aggregate the prefixes of all the customers into a single prefix and announce it to the IPv6 Internet.