If you have ever asked "What is an IP address?" or "What is an IP address used for?" the short answer is that an IP address is like a phone number for your internet-connected devices. It is a unique identifier. Any computer needs both an internal and external IP address to connect to another computer over a network using the internet's global language, the Internet Protocol, or IP.
There are about four billion unique IP addresses. The Internet Engineering Task Force (IETF), the group of engineers who invent and maintain the technology of the internet, specifies the format of these IP addresses. The "IP version 4" format was invented in the 1980s and is still popular. It looks like this: 192.168.107.13. The IETF created a newer "IP version 6" format with much more room for addresses (more than the stars in the observable universe), so the internet can continue to grow in the future.
With that established, let's explore what you'll need to know about IP addresses for your business.
An internal vs. external IP address
Your small- to medium-sized business (SMB) might have a network of its own, where all your computers and various devices are connected with each other. When you send a document to the printer, for instance, your PC uses the printer's IP address to send the data. This business network is private to you; no one else can connect to your printer. Accordingly, the IP address of the printer and of your PC are private addresses, and your network is known as a "private IP network."
But you might also have a public "service"—for example, a catalog on the web where customers can view or order your merchandise or fill out a form. This service or web page must be running on a computer with a "public" or external IP address so that anyone on the internet can connect to and use the service. This public computer could be maintained for you by a commercial web hosting provider who assigns a public IP address to that computer, or your IT could maintain the computer on your own premises. In this latter case, your internet service provider (ISP) will assign you a public or external IP address to use.
Now that you know the answer to the "what is an IP address" and "what is an IP address used for" questions, and now that you understand the difference between an internal and external IP address, how do they work as part of your small business network? When an employee in your business uses an online software as a service, for example, the machine in your network needs to talk to the machine at the other end. Since humans find it difficult to connect using IP numbers, they use a service called Domain Name System (DNS), which takes names like "Google.com" or "Verizon.com" and translates them to the corresponding public IP address so that your machine knows where to go.
A static vs. dynamic IP address
Businesses can choose whether they want addresses to be static or dynamic. Static addresses are constant, just like your business phone number, while the dynamic equivalent changes frequently. While there is an argument to be made for IP addresses to be dynamic to make security more robust, a static IP address confers many advantages, including:
- Better DNS support: When customers are trying to find your business online, having a static IP address makes the process faster for the DNS to translate the .com address to your network. A constantly changing IP address will make the network harder to track and longer for customers to connect to.
- Better communication: Voice and video communications are more efficient when machines know a single fixed destination on the internet to connect to.
- The Internet of Things (IoT) needs static addresses: The growing number of IoT-driven devices on a network makes static IP addresses a more attractive proposition. Especially when data from IoT devices drive IT algorithms, the IT networks need to know a fixed address to gather data from. If this address keeps changing, as is the case with a dynamic IP, then algorithms are likely to have a more difficult time in finding the data to work with.
In addition, static IP addresses increase reliability and are easier to manage. As the number of devices on business networks increases, SMBs have to manage ease of access with security. Answering the question "What is an IP address?" and understanding the difference between an internal and external IP address are the first steps in getting there.
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The author of this content is a paid contributor for Verizon.