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NAT or Network Address Translation is the process that enables a single device such as a router or firewall to act as an agent between the Internet or Public Network and a local or private network. This “agent”, in real time, translates the source IP address of a device on one network interface, usually the Internal, to a different IP address as it leaves another interface, usually the interface connected to the ISP and the Internet. This enables a single public address to represent a significantly larger number of private addresses.
The Origins of NAT
In order to understand NAT it helps to know why it was created. At one time, every computer that was part of a network had to have it’s own addresses so that the other computers could talk to it. There were a few protocols in use at the time, some of which were only for use on a single network, but of those that were routable, the one that had become the standard for the Internet was IP (Internet Protocol) version 4.
When IP version 4 addressing was created nobody had any idea how many addresses would be needed. The total address range was based on the concept of 2 to the 32nd power, which works out to be 4 294 967 296 potential addresses. Once you eliminate some of those for reserved addresses, broadcast addresses, network addresses, multicasting, etc., you end up with a workable scope of about 3.2 million addressees. This was thought to be more than enough at the time. The designers were not expecting the explosion of personal computing, the World Wide Web or smart phones. As of the beginning of 2012, some estimate the number of computers in the world in the neighborhood of 1 billion, and most of those computer users are going to want to be on the Internet or Search the World Wide Web. In short, we ran out of addresses.
This problem of an address shortage was realized before we actually ran out, and in the mid 1990s 2 technical papers called RFCs numbered 1631 (http://www.ietf.org/rfc/rfc1631.txt) and 1918 (http://tools.ietf.org/html/rfc1918), proposed components of a method that would be used as a solution until a new addressing methodology could be implemented across the Internet infrastructure. For more information on this you can look up IP version 6.
RFC 1631 described a process that would allow networking devices to translate a single public address to multiple private IP addresses and RFC 1918 laid out the use of the private addresses. The addresses that were on the Internet (Public IP addresses) could not be duplicated for them to work as unique addresses, but behind a firewall, which most large institutions had, they could use their own Private IP addresses for internal use and the internal computers could share the external or Public IP address.
To give an idea on a small scale how this works, image that a company has a need for 200 computer addresses. Before Private IP addresses and NAT the company would have purchased a full Class C address range which would have been 254 usable IP addresses; wasting about 50 addresses. Now with NAT, that company only needs 1 IP address for its 200 computers and this leaves the rest of the IP addresses in that range available for other companies to do the same thing.
NAT gives better value than it would first appear because it is not 253 companies that can use 254 addresses but each of those 254 companies could set up their networking infrastructures to use up to thousands of Private IP addresses, more if they don’t all have to talk to the Internet at the same time. This process enabled the Internet to keep growing even though we technically have many more computers networked than we have addresses.
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