DEFINITION of 'IP Address'

A unique identifier associated with a computer or network, which allows users to send and receive data. Internet Protocol (IP) addresses can be either static or dynamic, with dynamic being the most common. An IP address is assigned by routers or Dynamic Host Configuration Protocol (DHCP) servers.

BREAKING DOWN 'IP Address'

The development of Internet Protocol has given order to what could have been a chaotic environment. Though some may consider a Wild West, the Transmission Control Protocol (TCP) and Internet Protocol (IP), often written as TCP/IP to the Internet Protocol suite, created a common language and set of guidelines for how information should be transferred between end-users.

An IP address is similar to the Social Security Number: it is unique to a particular network and essentially allows the Internet to exist. When a website visitor uses a browser to look at an article, for example, the IP address indicates where packets of data should be delivered. The data is transmitted from host networks through routers, with the data sent from router to router until it reaches its final destination. When drawn out this process may look like a family’s cross-country vacation plotted out on a map.

Most IP addresses are broken into four groups, referred to as IPv4, with each segment separated with a period. For example, an IP address may look like 123.45.67.890, though in reality IP addresses are a base-10 representation of a base-2 number. As the Internet has grown in popularity and has been increasingly commercialized, it became clear that the IPv4 version’s 32-bit addresses were not going to be enough. This is similar to how phone numbers now include area codes and country codes, when at one time there were only a relatively small number of phone numbers in existence. The latest version of Internet Protocol is IPv6. It has eight groups instead of the four provided by IPv4. 

 

 

RELATED TERMS
  1. Internet of Things (IoT)

    The Internet of Things (IoT) is a network comprised of physical ...
  2. Address Coding Guide - ACG

    A comprehensive directory of street names and address ranges. ...
  3. FTP (File Transfer Protocol)

    A mechanism for the transfer of files between systems. File Transfer ...
  4. Network Effect

    The network effect is a phenomenon whereby a good or service ...
  5. Address Hygiene

    The precision and purity of postal addresses on a mailing list. ...
  6. Public Key

    A public key is a cryptographic code that allows a user to receive ...
Related Articles
  1. Investing

    Profit With Investment Policy Statements

    Defining how investments are managed and monitored can help investors meet their goals.
  2. Investing

    Analysts Bearish on Cisco Rival Juniper Networks

    A growing consensus suggests the IP router provider's stock may be overvalued.
  3. Investing

    Investment Policy Pitfalls

    An investment policy statement can be a powerful tool - as long as you avoid these common mistakes.
  4. Investing

    Introduction To Inflation-Protected Securities

    Inflation is an enemy to investors - except to those who invest in IPS, which guarantee a real rate of return with no credit risk.
  5. Investing

    Broadcom Buys Brocade in $5.9 Billion Deal

    In the first of what will certainly be many steps given the nature of the deal, Broadcom (NASDAQ: AVGO) has acquired network solutions provider Brocade Communications (NASDAQ: BRCD) for $5.5 ...
  6. Investing

    How The Internet Has Changed Investing

    Discover the significant impact the Internet has had on how we invest and view the markets.
  7. Investing

    How Do Internet Browsers Make Money?

    A look into ways that the top 3 Internet browsers make their money.
  8. Investing

    Internet of Things Poses Massive Cyberthreat (SYMC, PANW)

    Legacy IT firms and cloud-based cyber startups alike rush to offer organizations worldwide a secure connection between billions of new connected devices.
  9. Taxes

    Pros and Cons of an Internet Sales Tax

    Learn about the pros and cons of a nationwide Internet sales tax and the different bills that have been proposed to establish laws regarding Internet sales.
  10. Tech

    What Is Stellar Cryptocurrency?

    Stellar was among the top-performing cryptocurrencies in 2017. Here is a brief intro to the cryptocurrency.
RELATED FAQS
  1. What are examples of popular companies in the Internet sector?

    Discover which Internet companies are the most popular among investors in this high potential growth area of the technology ... Read Answer >>
Hot Definitions
  1. Treasury Yield

    Treasury yield is the return on investment, expressed as a percentage, on the U.S. government's debt obligations.
  2. Return on Assets - ROA

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
  3. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  4. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  5. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  6. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
Trading Center