ARCHIVED: What is Network Address Translation (NAT)?

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Network Address Translation (NAT) is an IETF standard that enables a local area network (LAN) to use one set of IP addresses for internal traffic and a second set of addresses for external traffic. All necessary IP address translations occur where the LAN interfaces with the broader Internet. NAT converts the packet headers (and in some cases the port numbers in the headers) for incoming and outgoing traffic and keeps track of each session. This does mean, however, that NAT overrides "Internet transparency", a practice in which packets remain intact throughout their transmission. Routers and Windows Internet Connection Sharing also provide NAT.

NAT accomplishes these key purposes:

It acts as a firewall by hiding internal IP addresses.
It enables an enterprise to use more internal IP addresses, since there is no possibility of conflict between its internal-only IP addresses and those used by other organizations. Essentially, an organization can present itself to the Internet with fewer IP addresses than used on its internal network, which conserves public IP addresses.
It allows an enterprise to bundle multiple ISDN connections into one Internet connection.