Why Private IP Addresses Matter: Understanding NAT and IPv4 Scarcity

Introduction

When building a LAN, managing IP addresses is crucial. Because IPv4 address space is limited, the use of private IP addresses becomes an effective way to alleviate the shortage.

This article explores the classification and allocation of private IP addresses, the principle of the NAT protocol, and the differences between private and public networks as well as internal and external networks.

IP Address Scarcity

IPv4

uses 32‑bit addresses, allowing about 2^32 ≈ 4.3 billion addresses. With a global population near 7 billion and multiple devices per person, the available IPv4 addresses are far fewer than needed.

While IPv6 offers 128‑bit addresses ( 2^128 possibilities), it cannot perfectly interoperate with IPv4. Consequently, the NAT protocol was adopted to mitigate IPv4 exhaustion, and it remains widely used even as IPv6 gradually gains adoption.

Classification and Allocation of Private IP Addresses

In a LAN, administrators typically assign private IP addresses from Class A, B, or C ranges, known as private network addresses. These do not connect directly to the Internet.

All three classes provide a small block of addresses for global LAN deployment, allowing each organization to use its own private network without conflict.

Class A: 10.0.0.0 ~ 10.255.255.255

Class B: 172.16.0.0 ~ 172.31.255.255

Class C: 192.168.0.0 ~ 192.168.255.255

These private ranges enable enterprises worldwide to build LANs without IP address collisions. Class A offers 16 times more hosts than Class B, which in turn offers 16 times more than Class C; the latter’s 2^16‑2 hosts are sufficient for most companies, which is why 192.168.x.x is the most common private address.

Private/Public Networks and Internal/External Networks

Private networks are distinguished from public networks by their IP addresses. Private IP addresses are not directly reachable on the Internet; they rely on NAT at the router to appear as a single public address.

Public networks are truly Internet‑connected and can be accessed directly.

The terms “internal network” and “external network” correspond to the presence of a firewall. Inside a firewall is the internal network; outside is the external network. Technologies such as VPN (often using socks5) allow traffic to traverse firewalls, and the national firewall ( GFW) defines the boundary between domestic (internal) and foreign (external) networks.

NAT Protocol

When a private‑network computer needs to reach the Internet, it uses the NAT (Network Address Translation) protocol. NAT rewrites the source or destination IP address of packets as they pass through a router or firewall. Typically, a private network shares a single public address provided by an ISP; NAT converts private source addresses to this public address for outbound traffic.

Example: A host with private

IP

192.168.100.99

communicates through a router that holds a public

IP

73.72.71.70

. Outbound packets have their source address translated from 192.168.100.99 to 73.72.71.70.

The advantages of NAT include reducing IPv4 address exhaustion, low cost, and providing a basic layer of security by hiding internal hosts. Its drawbacks are that hosts lack true public addresses, which can prevent participation in protocols such as Multicast.

When multiple hosts share a private network, the NAT router records each host’s internal address and port, assigns a global address/port, and stores this mapping in a NAT table. Upon receiving a response, the router uses the table to forward the packet to the correct internal host, handling both outbound and inbound address translation.

Conclusion

This article introduced the IPv4 address shortage, explained how the NAT protocol mitigates it, discussed why IPv6 was not widely adopted initially, and clarified the distinctions between private/public and internal/external networks.