This (127.0.0.1) is an IPv4 address called localhost or loopback address. Localhost is the network or local server of the personal computer which is provided by Microsoft. This IP address is used in all personal computer but it never let them to communicate with other devices like the original IP address. It is also called Internet Information Service(IIS). You can also used this localhost to run HTTP or HTTPS sites. The hackers called it the better place because the localhost is your computer and it is your personal property and you have right to do anything with it. The problem is created when you can do illegal things on others property.
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