DHCP, Dynamic Host Configuration Protocol, is a communications protocol that dynamically assigns unique IP addresses to network devices. As a network device joins or leaves an IP-based network, DHCP automatically renews or releases an IP address.
DHCP runs in a client/server mode, where server sets up a pool of available IP addresses for a network. A DHCP server also provides network gateway, subnet masks, name server addresses and amount of time ("lease") that a given IP address will be valid. A DHCP client retrieve those parameters and use them to join the existing network.
DHCP allows network administrators centrally manage and automate the assignment of the IP addresses without having to worry about assigning duplicate addresses, making network administration a lot easier to manage.
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