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Internet Protocol (IP) is the principal set (or communications protocol) of digital message formats and rules for exchanging messages between computers across a single network or a series of interconnected networks, using the Internet Protocol Suite (often referred to as TCP/IP). Messages are exchanged as datagrams, also known as data packets or just packets.
IP is the primary protocol in the Internet Layer of the Internet Protocol Suite, which is a set of communications protocols consisting of four abstraction layers: link layer (lowest), Internet layer, transport layer and application layer (highest).
The main purpose and task of IP is the delivery of datagrams from the source host (source computer) to the destination host (receiving computer) based on their addresses. To achieve this, IP includes methods and structures for putting tags (address information, which is part of metadata) within datagrams.
The process of putting these tags on datagrams is called encapsulation.
Think of an anology with the postal system. IP is similar to the U.S. Postal System in that it allows a package (a datagram) to be addressed (encapsulation) and put into the system (the Internet) by the sender (source host). However, there is no direct link between sender and receiver.
The package (datagram) is almost always divided into pieces, but each piece contains the address of the receiver (destination host). Eventually, each piece arrives at the receiver, often by different routes and at different times. These routes and times are also determined by the Postal System, which is the IP.
However, the Postal System (in the transport and application layers) puts all the pieces back together before delivery to the receiver (destination host).
Note: IP is actually a connectionless protocol, meaning that the circuit to the receiver (destination host) does not need be set up before transmission (by the source host). Continuing the analogy, there does not need to be a direct connection between the physical return address on the letter/package and the recipient address before the letter/package is sent.
Originally, IP was a connectionless datagram service in a transmission control program created by Vint Cerf and Bob Kahn in 1974. When format and rules were applied to allow connections, the connection-oriented Transmission Control Protocol was created. The two together form the Internet Protocol Suite, often referred to as TCP/IP.
Internet Protocol version 4 (IPv4) was the first major version of IP. This is the dominant protocol of the Internet. However, iPv6 is active and in use, and its deployment is increasing all over the world.
Addressing and routing are the most complex aspects of IP. However, intelligence in the network is located at nodes (network interconnection points) in the form of routers which forward datagrams to the next known gateway on the route to the final destination. The routers use interior gateway protocols (IGPs) or external gateway protocols (EGPs) to help with making forwarding route decisions.
Routes are determined by the routing prefix within the datagrams. The routing process can therefore become complex. But at the speed of light (or nearly so) the routing intelligence determines the best route, and the datagram pieces and datagram all eventually arrive at their destination.