A potential barrier to the development of IoT is the technical limitations of the version of the Internet Protocol (IP) that is used most widely. IP is the set of rules that computers use to send and receive information via the Internet, including the unique address that each connected device or object must have to communicate. Version 4 (IPv4) is currently in widest use. It can accommodate about four billion addresses, and it is close to saturation, with few new addresses available in many parts of the world.

Some observers predict that Internet traffic will grow faster for IoT objects than any other kind of device over the next five years, with more than 25 billion IoT objects in use by 2020,76 and perhaps 50 billion devices altogether. IPv4 appears unlikely to meet that growing demand, even with the use of workarounds such as methods for sharing IP addresses.

Version 6 (IPv6) allows for a huge increase in the number IP addresses. With IPv4, the maximum number of unique addresses, 4.2 billion, is not enough to provide even one address for each of the 7.3 billion people on Earth. IPv6, in contrast, will accommodate over 1038 addresses ? more than a trillion trillion per person.

It is highly likely that to accommodate the anticipated growth in the numbers of Internet-connected objects, IPv6 will have to be implemented broadly. It has been available since 1999 but was not formally launched until 2012. In most countries, fewer than 10% of IP addresses were in IPv6 as of September 2015. Adoption is highest in some European countries and in the United States, where adoption has doubled in the past year to about 20%.

Globally, adoption has doubled annually since 2011, to about 7% of addresses in mid-2015. While growth in adoption is expected to continue, it is not yet clear whether the rate of growth will be sufficient to accommodate the expected growth in the IoT. That will depend on a number of factors, including replacement of some older systems and applications that cannot handle IPv6 addresses, resolution of security issues associated with the transition, and availability of sufficient resources for deployment.

Efforts to transition federal systems to IPv6 began more than a decade ago. According to estimates by NIST, adoption for public-facing services has been much greater within the federal government than within industry or academia. However, adoption varies substantially among agencies, and some data suggest that federal adoption plateaued in 2012. Data were not available for this report on domains that are not public-facing, and it is not clear whether adoption of IPv6 by federal agencies will affect their deployment of IoT applications.