What is network address translation (NAT), and how does it work?

What is NAT?

Network address translation (NAT) is a networking process that allows multiple devices within a private local area network (LAN) to share a single public IP address when accessing external networks, such as the internet. NAT modifies the IP address information in the data packets as they pass through a router or similar device. These data packets are small units of information sent over the network, containing the data being transmitted and other important details like the sender’s and recipient’s IP addresses. This modification makes it possible for an entire group of devices — each with its private IP address — to be represented by a single public IP address when communicating with the outside world.

NAT is an essential technology, especially with the limited availability of IPv4 addresses. By allowing multiple devices on a local network to use one public IP address, NAT conserves valuable IP address space and simplifies IP address management for network administrators and service providers.

How does NAT work?

When you connect your device, for example, a laptop, to your home network, NAT determines how that device communicates with the internet.

Let’s say you have a laptop connected to your home network, which uses NAT. This network is connected to a router, which provides access to the internet. Let’s say you use that laptop to search for a nearby food store on a search engine. When you hit “Enter,” your request is sent from your computer to a router and then to the web. This is where NAT comes into play. As the data packet passes through the router, NAT modifies the packet and replaces the device’s private IP address with the router’s public IP address.

This translation is necessary because internal IP addresses used within your home network are non-routable IP addresses and aren’t recognized by internet servers. If the packet kept its private IP address, the receiving server wouldn’t know where to send the information back to. Internet routers are programmed to automatically drop any packets with private IP addresses.

The good news is that all routers sold today for home and small office use are equipped with NAT, so they easily translate between different types of IP addresses — from private to public and vice versa. This process ensures that your requests can travel across the web, and the responses can find their way back to your device without any issues.

Types of NAT

NAT comes in different types, each designed for specific needs depending on how a network is set up. Understanding different types of NAT can help you manage or troubleshoot your network’s connectivity. You can change the NAT type on your PC at any time, depending on your needs. Below, we’ll explore the main types of NAT and their specific functions.

Static NAT

Static NAT assigns a fixed public IP address to a specific device within a private network. That means that every time the device communicates with external networks, it uses the same public IP address. Static NAT is particularly useful when you need to make a device, such as a web server or an IP camera, accessible from outside networks. For example, if you host a website on a server in your home or office, static NAT ensures that the server is always reachable at the same IP address.

Dynamic NAT

Dynamic NAT, unlike static NAT, does not assign a single, consistent public IP address to a device. Instead, it assigns a different external IP address each time the device connects to an external network. This IP address is selected from a pool of available public IP addresses managed by the router. Dynamic NAT is typically used in environments where a large number of devices need to access the internet, but each does not require a consistent public IP address.

Port Address Translation (PAT)

Port address translation (PAT), or overloading, is a variation of dynamic NAT that allows multiple devices on a private network to share a single public IP address. It works by giving each session a unique port number so multiple devices can connect to the internet at the same time using one public IP. PAT is popular with organizations because it allows employees to share a single IP address, which a network admin can easily manage. This approach is also cost-effective because it reduces the number of public IP addresses needed for the network.

Overlapping NAT

Overlapping NAT occurs when the same registered IP addresses are used on multiple internal networks within an organization. It often happens when two or more networks that originally used the same IP address range merge or need to communicate with each other. Overlapping NAT helps avoid conflicts between these overlapping addresses and allows the networks to communicate smoothly without the need to change their IP addresses. This type of NAT is especially useful in large organizations where different departments or branches have different networks and use the same IP address ranges.

Advantages of NAT

NAT offers several benefits that make it an important component of modern networking, especially for home and small office networks:

• IP address conservation. NAT allows multiple devices on a private network to share a single public IP address. This process helps save IP addresses for organizations with limited IPs from their internet service provider (ISP).

• Increased security. When combined with firewall features, NAT adds a layer of security. A NAT firewall blocks unsolicited inbound traffic from the internet and hides internal IP addresses from the outside world, which makes it harder for external attackers to target specific devices within the network.

• Network flexibility. NAT allows you to change internal IP addresses easily without affecting external communication, which makes network management more flexible.

• Cost-effectiveness. NAT reduces the need for multiple public IP addresses, which can save costs for organizations and internet service providers.

• Easier network management. NAT simplifies the management of IP addresses, especially in large networks, by making it easier to assign and track IP addresses.

Disadvantages of NAT

Despite its many benefits, NAT has several drawbacks that can affect network performance and compatibility with certain applications:

• Performance issues. NAT requires routers to modify IP address information in each packet, which can introduce latency and reduce overall network performance.

• Limited end-to-end connectivity. NAT can interfere with direct communication between devices, making it harder to use certain protocols and services, like peer-to-peer connections.

• Incompatibility with some applications. Some applications and technologies don’t work well with NAT, especially those that need direct device-to-device communication. When NAT is enabled, they might not work correctly or require extra setup. This issue is especially common for apps that rely on specific port numbers or direct routing.

• Complexity. NAT can complicate network troubleshooting by hiding devices' original IP addresses, which makes it challenging to locate specific devices or issues.

Should I use NAT?

If you’re wondering what the purpose of NAT is, here are some of the reasons why implementing NAT in your network may be beneficial:

• It reduces the amount of needed IP addresses. Without NAT, the internet would not have enough IP addresses, and it would be impossible for our data to navigate across the web.
• It enhances your security. NAT creates a border between internal and external networks. No one can connect to your computer unless it initiates the contact, and no external agent can use your IP address to intercept your device or network.
• Easier network administration. NAT allows web and FTP servers to be moved to other hosts and changes to be made on an internal network more easily.