What is DHCP and what does it do?

Short for Dynamic Host Configuration Protocol, a communication protocol that dynamically or automatically assigns IP addresses to devices located on the network. With DHCP a device can have different IP address every time it connects to a network. DHCP also supports static and dynamic IP addresses on thesame network.

DHCP uses the concept of a "lease" or amount of time that a given IP  address will be valid for a computer. The lease time can vary dependig on how long a user is likely to require the Internet connection at a particular location. It´s especially useful in education and other environments where users change frequently. Using very short leases, DHCP can dynamically reconfigure networks in which there are more computers than there are available IP addresses.

Source - Techtarget.com

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