Just another IPV4 broker?

Just another IPV4 broker you might think. Well I don’t think so. There are many fundamental differences between an exchange and a broker. In fact, a proper exchange that functions well will be used by brokers. How big an exchange this will ever be is hard to say as nobody knows how long it will take before demand for IPV4 will diminish due to increasing integration of IPV6. I have heard or read guestimates between 5 and 20 years. (Discussions about why everyone should focus on IPV6 integration instead of buying more IPV4 is not what this blog is about in case you hadn’t realized it yet).

The bigger an exchange will become, the lower the commission rates required for being a self-supporting entity will be. And with that happening an exchange will become a more viable option for a broker to use in order to increasingly fill buy and sell orders for its clients.
A classic stock market has market makers on the one end and brokers and banks on the other. Stocks are always traded via the market makers by the brokers and banks on behalf of the end client. In Amsterdam where the first stock exchange of its kind in the world was founded, the market makers were all located against the outer walls of the floor and corners. For this reason they were called ‘hoekman’ which translates to cornerman. Market makers trade in a number of fixed stocks where they compete among each other. For large stocks that would have been 3 different market makers and smaller stocks 2. Based on their order books they would get together on the trading floor and negotiate with each other in order to end up with a new quote on the board reflecting a price that would trade the largest number of shares. On busy days these meets were very frequent. More shares traded meant more commission for the market maker. In order to influence the next quote on the board in a direction that would lead to the maximum number of shares traded the market maker would sometimes buy or sell from the competing market maker in order to get the price where he wants it. This buying or selling should not be mistaken for trying to make a profit in any other way than commission. Sometimes the market maker kept shares in his book or a short position (the opposite) and sometimes this would lead to a profit but the main goal was to keep the market fluid. At the end of the day usually all positions were closed after a hopefully profitable day.

Today this system does not exist anymore and the old floor in Amsterdam is now used by options traders. A different game. Everything is automated and the ‘hoekman’ is a relic of the past. The principles however stay the same. IPV4 Exchange International is modeled after exactly these principles. IPV4 blocks are of course not the same as stocks and shares. The financial markets are highly volatile where IPV4 pricing will likely rise steadily over time. That does not mean there is no need for a system that will make buying and selling easier where pricing is more transparent. At the moment most participants don’t have a clue about what’s going on. Some sellers are selling at very low rates while others set their expectations high and nothing moves. Sending lots of emails to people with listings on the RIR portals is very inefficient. Some state a minimum price but this is always being ignored.

At the moment I am writing this article the total number of IPs available for transfer is 524.032 as stated on the RIPE LIR Portal. The total number of IPV4 addresses requested for transfer however, is a mighty 27 million, 326 thousand and 720. And these numbers are hardly changing. And this is only in the RIPE region, add to this ARIN and APNIC. This could be due to a number of reasons but one of them is for certain perception of value. And for the advocates of a speedier transition to IPV6; this transition will be brought on faster by a higher price for IPV4. It will be a strong motivator. Finally, for those who represent the more than 27 million IPs; if you are just hesitant because you think price will drop… don’t!