Whats the purpose of Cisco-Loopback ip addresses?

What is a purpose of a cisco loopback address? It is not assigned to any physical ports and cannot connect any networks to it. It almost seems useless and a waste of precious IP addresses. Furthermore, how do I go about assigning one.

Most people with a background in working with desktop computers have come across a loopback address, the most common being 127.0.0.1 that loops you back to your machine and checks pinging it checks if your TCP/IP stack is up and running.

With cisco devices, loopback addresses are virtual and are not assigned to physical interfaces that you can see. It can be a very powerful tool in any infrastructure as its strongest characteristic is that it never goes down unless the whole device goes down. This is very significant to processes that use IP addresses to point to a particular device. One example is ospf that uses router id's to establish neighbor addresses. The router ID is determined as the highest active loopback address. If this is not available then the highest IP address is chosen. In a situation where a physical port goes down that happens to be the root-id then the router is deemed to be unavailable, resulting in a whole election process for all routes through that router, even though in reality the other routes are still available. Another example of the use of loopback addresses is in lab environments to simulate networks behind a router. Assignig a loopback address is a simple task as shown below:

Router(config)#interface loopback 1
Router(config-if)#ip address 192.168.0.1 255.255.255.0
Router(config-if)#exit

Where the the number "1" is the loopback interface number and is locally significant. The address can be verified on the running config as well as usinig the "show ip interface brief command"


Serial0/0 unassigned YES unset administratively down down
Serial0/1 unassigned YES unset administratively down down
Serial0/2 unassigned YES unset administratively down down
Serial0/3 unassigned YES unset administratively down down
FastEthernet1/0 unassigned YES unset administratively down down
Loopback1 192.168.0.1 YES manual up up


As we can see, the interface immediately shows up as up and up even when all the other interfaces are down. Loopback addresses are great for management and if utilized properly can be a great tool to ping and check if your routers are up and running as well as for remote connection to a device.
What other uses can you think of ?