An IP (Internet Protocol) address is assigned to your computer (home network), or any internet capable device (e.g. Smartphone's, ATM machines etc.), each time you go online. They act like a unique online identifier and allow you to communicate with other computers and servers around the world; not unlike a phone number.
The IP itself is the connection identification method by which data can then be sent from one computer to another on the Internet or a local network. To work IP's must also use other protocols, such as TCP (Transmission Control Protocol), to manage various aspects of the connection between computers and devices. IP's typically come in two forms, older IPv4 (Internet Protocol version 4) addresses and the newer IPv6.
Essentially every time you connect to the Internet your computer (home network) is assigned a unique IP address, which identifies you to other online computers and services. A single IP can be shared between many users on a home or business network. Most ISPs offer a Dynamic IP, which changes each time you connect. By comparison a Static IP means that your online address is always the same no matter how many times you reconnect, which is good for setting up servers.
Sadly IPv4 addresses, which are made up of four number groupings (these numbers are never greater than 255.255.255.255) and have been used since the early 1980's, only provide a maximum of approximately 4.3 billion addresses. The Internet Assigned Numbers Authority (IANA) allocated its last remaining IPv4 blocks in February 2011, signalling a migration to its replacement (IPv6).
Example IPv4 Address
IPv4's replacement, IPv6, has actually been around since the mid-1990's. These ugly looking addresses are significantly longer and more secure by design. They are 128bits long, written in hexadecimal and separated by colons. Unlike IPv4 it's rather tough to express the total amount of IPv6 addresses available without resorting to a math expression. However we think it starts at something around 340 Undecillion+.
Example IPv6 Address
At the time of writing only a few ISPs have adopted it due to a lack of demand and associated hardware/software support. Consumer routers in particular are only now beginning to show early signs of IPv6 support. Failing to support IPv6 could cause some connectivity and performance problems in the future, especially with older hardware and software, although most consumers will not be aware of the gradual transition (some unofficial predictions suggest that IPv6 support will be essential by 2012).
> Internet - International Network
> IPTV - Internet Protocol TV
> VoIP - Voice over IP
> ISP - Internet Service Provider
> WWW - World Wide Web