Why the counter-argument on IP governance fails under real-world pressure

Why the counter-argument on IP governance fails under real-world pressure is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• Critics argue IP addresses must remain a shared operational resource governed by community consensus, not markets.
• Lu Heng contends this model collapses under scarcity, geopolitics, and declining participation.

The strongest case against ‘IP as capital’

The debate over whether IP addresses should be treated as capital assets or purely administrative resources has sharpened as IPv4 scarcity intensifies. In his essay On the Counter-Argument — and Why It Fails, Lu Heng, CEO of LARUS Limited and founder of the LARUS Foundation, lays out what he considers the most serious objection to his position.

That counter-argument holds that IP addresses are “not capital” but a shared operational resource that must be centrally allocated to avoid speculation, hoarding, and inequality. Markets, critics argue, reward money rather than connectivity. Legitimacy, in this view, flows from community governance and participation rather than efficiency or price signals. Central coordination, through a single registry and a single source of truth, is seen as essential to preserve global uniqueness and routing stability.

Lu summarises this position directly, writing:

“They argue that IP addresses are not capital. They are a shared operational resource. They must be administratively allocated to prevent speculation, hoarding, and inequality.”

This argument, he concedes, is coherent and well-intentioned. It is also, in his assessment, structurally unsound.

Where the counter-argument breaks down

Lu’s first objection is that proponents confuse legitimacy with survivability. Open participation, he argues, does not scale when participation dwindles to “a small, aging, self-selecting group”. Processes may appear legitimate on paper while failing under stress, particularly as address scarcity sharpens incentives and conflicts.

The second failure, he writes, is the assumption that coordination requires centralisation. The Internet’s own history undermines this claim. Global coordination at the network layer has long functioned without a central authority. Lu asks why similar decentralised logic cannot apply to the resource layer once economic and geopolitical risk becomes visible.

Trust is the third weak point. Sanctions, court-ordered freezes, and jurisdictional capture are no longer hypothetical risks.

“Sanctions are real. Court freezes are real. Jurisdictional capture is real,”

Lu writes, arguing that any governance model dependent on lasting goodwill between rival states is fragile by design.

Finally, he identifies the absence of a credible end state. Calls for better norms, patience, and behaviour offer no answer to what happens when behaviour fails. In an environment defined by scarcity and power, moral restraint alone is insufficient.

Mechanisms over trust in a fragmented world

The contrast Lu draws is stark.

“Their model works only when everyone behaves well. Mine works when no one does,”

he writes. Where the counter-argument relies on trust, restraint, and consensus, his approach prioritises mechanisms, redundancy, portability, and enforceable rights.

This is not framed as an ideological dispute but as a response to constraints imposed by geopolitics and scarcity. Nations may disagree profoundly, but they share a dependence on a functioning Internet. Systems built on incentives and rights, rather than permanent trust, are more likely to endure.

The implication for internet governance is uncomfortable. Community-based coordination, long seen as a virtue of the Regional Internet Registries, may struggle as IP addresses acquire clearer economic value. Whether or not markets are embraced, the pressures Lu describes are already reshaping the environment in which number resources are governed.

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