Behind domain names such as www.google.com or www.yahoo.com are numbers called IP addresses. These numbers provide three important functions:

• Identification of all computers that are connected to the internet. Domain names such as google.com are translated by special servers called DNS (domain name servers) into numeric identifiers such as 74.125.45.100
• It is also an address, meaning it indicates the computer’s location on the internet
• Addresses are the information used by the bits of information (packets) flowing in the internet to move from one computer to another. This function is called routing.

The designers of the internet decided that IP addresses will be a 32 bit number or 232. This means that there are 4,294,967,296 unique addresses available. The current implementation of internet addressing is called IPv4 (IP version 4). However, due to various historical reasons, less than 4.3 billion addresses are actually available and the number of routable IP addresses is rapidly decreasing. It was already recognized in the 1980’s that address depletion will be a significant problem for the internet and was foreseen that by 2010, the effects of address depletion will be strongly felt.

One way of alleviating network address depletion is to use shared web hosting. Web sites on shared hosts use the same server along with hundreds of other sites. These site all have the same IP address. Some important internet services are not available to sites that are running on shared hosts such as SSL (secure sockets layer)

Web host providers also provide dedicated web hosting where only one website sits on the server. The IP address of the server is not shared by other sites and this makes it possible to implement SSL on this kind of site.

When you are operating an e-commerce site, you must be able to process credit card transactions in a secured manner. This is where SSL is useful but this option is only available to dedicated web hosting. SSL uses some form of cryptography. Important information such as credit card numbers are encrypted using implementations of well-known and very secure encryption algorithms such as the Blowfish as well as its successor called the Advanced Encryption Standard.

Merchant accounts use SSL to process credit card transactions. If you operate a site that is shared by hundreds of other sites, the owner of an e-commerce site may opt to use an electronic shopping service that is hosted on some other site like PayPal. This is something that most on-line shoppers avoid because they do not want to be taken to another site just to close the deal.

When a website gets notorious for hosting malware, pornography or other offensive content, the IP address of that site is banned or red-flagged by search engines. When the offensive site is located on a shared server, it will be unfortunate for the other sites sharing the server because their content will become red-flagged as well. Dedicated sites will never have this problem

A great advantage of dedicated sites is greater control of the server which goes all the way to complete access to the operating system of the server.

Another important service available only to sites on dedicated web hosts is VPN or virtual private networking. Implementing VPN requires SSL to operate properly. VPN is a great feature for companies who need a geographically widespread, secure environment for a shared, read and write access to documents and folders over the internet.

When the successor of IPv4 called IPv6 starts to become the dominant addressing scheme, network address depletion won’t be problem anymore. IPv6 is a very, very big number (2128), it has been estimated that up to 296 addresses are available to entire human population (6.5 billion) living 1996. IPv6 has been designed to address several shortcomings of IPv4 of which mandatory network security has been seen to have the most impact for e-commerce sites. Whether this will impact e-commerce on shared servers still remains to be seen.