What Is DHCP – Overview of IP Address Assignment

In today’s world, it’s more important than ever, for devices routinely efficiently networked when connected.  Many ask what DHCP means. To clarify it is a Dynamic Host Configuration Protocol (DHCP) server.  It is the mechanism for ensuring that devices can coexist on networks to which they're joined.  In this article, we want to define what DHCP is and how it works to get a better understanding.

In simple terms, DHCP helps ensure that devices ultimately correctly configured to join networks.  DHCP does this by assigning IP addresses and other information to each host (or device) connecting to a network.

Purpose of DHCP

On a network, even a small home network, no two hosts can have the same IP address. This means that manual configuration of IP addresses could cause problems, especially as we introduce more and more connected devices.

That is to say, the DHCP server solves this issue by automatically assigning each newly connected host a unique IP address. It also assigns other DHCP options, including the subnet mask, gateway address, and the domain name server (DNS) address, to continually keep networks manageable.

For in home networks, the default gateway is likely the IP of the router.  This IP routinely used to reach the Internet. By default, home routers set to use DHCP, whereas each connected device will receive the necessary settings from the router.

Therefore, on your home network, your router serves as a simple DHCP server that assigns this information to hosts. On the other hand, a dedicated DHCP server on a large network gives the LAN Admin control over IP address assignment and IP Address Management.

How DHCP Works

DHCP is essentially an automated "plug-and-play" for your network.  This allows every device automatically configured for a seamless connection. To clarify, as devices connect, IP addresses and proper configuration parameters eventually assigned. And as they leave the network and their IP lease expires, their information routinely returned to the local DHCP server database and then reassigned to other devices.

That is a quick start for defining what DHCP is and how it works, but the following information goes into detail.  In more technical terms on how DHCP works, is a DHCP relay agent is any host that forwards these packets between clients and servers, called DHCP messages. Relay agents routinely used to forward requests and replies between clients and servers when they are not on the same physical subnet.

DHCP runs at the application layer of the Transmission Control Protocol/Internet Protocol (TCP/IP) stack to dynamically assign IP addresses to Dynamic Host Configuration Protocol clients and to allocate TCP/IP configuration information to those Dynamic Host Configuration Protocol clients.

When a Dynamic Host Configuration Protocol server receives the message from the client, it also broadcasts a DHCP offer message over the Ethernet network, informing the client that it is available.

Benefits of Dynamic Host Configuration Protocol

As discussed management of IP addresses can be cumbersome, especially as networks grow. DHCP servers simplify IP address management by:

  • Preventing IP address conflicts. Manual entry of Internet Protocol (IP) address information can cause duplicate IPs, or incorrect IPs, both of which are difficult to discover. With a DHCP server, the IPs will always be unique and will always be able to connect to the network.
  • Automating management processes. With a Dynamic Host Configuration Protocol server, the network administrator doesn’t need to manually keep track of which device owns which IP address. Additionally, it allows organizations to easily update their IP address schema and network configuration.

Important DHCP Concepts

DHCP Server

The server is the device that runs and manages the DHCP information, including IP address information. This can be a router in your home.  DHCP servers receive the necessary information and sets up the client.

DHCP Client

The device eventually assigned an IP address, and other information from the DHCP network server, from the client. Furthermore, this can be your computer, mobile device, or even your refrigerator.

Static Vs Dynamic IP

Dynamic IP addresses change every so often, or every time a device connects to a network. A static IP address is ultimately set by an administrator and does not change.

Although DHCP stands for dynamic host configuration protocol, you can still set up static IP addresses using DHCP.

For example, have you ever printed something to a network printer? Do you ever wonder how your device can connect to the printer? Each network device has a MAC address. Using the Dynamic Host Configuration Protocol server, the LAN administrator can assign a static IP to a specific MAC address.

This allows the network printer to always get the same IP even after it reboots, without assigning the IP to the printer.


A lease is simply the length of time a Dynamic Host Configuration Protocol server allows a device to hold a particular IP address. When the DHCP lease expires, the device could be assigned a new IP address.

Dynamic Host Configuration Protocol Server Examples

DHCP Protocol Via ISP

Your ISP has a Dynamic Host Configuration Protocol server that assigns IPs by modem MAC addresses. When your modem comes online, it communicates to the network indicating it is looking for an IP address. The DHCP server listens to this communication and starts talking to the modem.

The modem then transmits its MAC address to the server. At that point, either an IP has been reserved for the modem, or one is assigned at that time. Hence, cloning your MAC address can possibly get you a different IP from your ISP.

DHCP Protocol Via Router

Under the General Setup or LAN Setup tab in most routers, there is a setting option for Dynamic Host Configuration Protocol.  This option can control how many IPs are ultimately assigned and can enable/disable the server portion of the router. If the server option is disabled, an IP address will need to be statically assigned to each computer.

This goes for wired and wireless. Any connection on a network must have an IP address.

Think of your ISP’s Dynamic Host Configuration Protocol server as providing your home network a globally unique IP address, and that defines what DHCP is and how it works. That is, your home network has a Public IP address unique from any other network. And think of your router providing a unique local IP address to each device connected to your home network.

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