When you're connected to a network, your computer or smart device will obtain an IP address either from your ISP or your router. There are 2 ways how you can assign an IP address to your device: (1) dynamically via DHCP or (2) statically by manually assigning an IP address yourself. In either case, you must use the IP address that is provided to you by your ISP, or the IP range you allocated yourself within your private space (i.e. private IP address).

How are IP addresses allocated?

Before we can discuss IP assignment, we need to understand how IP addresses are allocated. There are two versions of IP addresses: IPv4 (version 4) and IPv6 (version 6). There are numerical differences, but they essentially serves the same purpose by uniquely identifying a device on the Internet. There are a few organizations that allocate and manage IP addresses globally, and they are:

• ICAAN (The Internet Corporation for Names & Numbers): ICANN manages supply of all IPv4 and IPv6 addresses as well as domain name system (DNS) and Root Servers.
• IANA (Internet Assigned Numbers Authority): IANA is a part of ICANN that maintains technical aspect of the DNS. DNS is the system that translates human-readable domain names to machine friendly IP addresses.
• ARIN (American Registry for Internet Numbers): ARIN is a region specific organization that manages IP addresses for the USA, Canada, Caribbean and North Atlantic islands.
• ISP (Internet Service Providers): ISPs reach out to ARIN and register blocks of IP addresses (i.e. class A, B and C). In addition to ISPs, large corporations may reach out to ARIN to register blocks of IP address for their corporate use.
• RIR (Regional Internet Registry): Much like the ARIN for managing IP address for North American region, RIR manages IP addresses for rest of the world.

As ARIN and RIR manages IP addresses for the region, they allocate and deallocate IP addresses for countries, ISPs and corporations. A larger blocks of IP addresses are assigned to countries, the accuracy of IP location for country level is approximately 95% - 98% depending on the provider.

How are IP addresses assigned?

Once one or more blocks of IP addresses are assigned to an ISP or Corporation, the organization assigns the IP address to its customers. When you purchase the Internet Service from an ISP, you have an option to obtain static (non-changing) or dynamic (changing) IP Address(es). Most home users obtain a dynamic IP address, and small businesses may obtain static IP addresses. The IP addresses obtained from an ISP are "public" IP addresses which are a globally unique number within the Internet.

Once the IP address is obtained by your router from your ISP, you have an option to create a private network by assigning private IP addresses to your devices that are not globally unique, but unique within your private network.