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                 DHCP dynamic host configuration protocol

DHCP stands for dynamic host configuration protocol and it assigns IP address automatically to the client, All devices on a network has an IP address, which is like a phone number, which is used to communicate with other devices on a network.  DHCP is the application that responsible for assigning addresses, making sure no two devices on the network has the same address.
It is necessary for all devices on a network to have an address (known as an IP address), to be able to communicate with other devices on a network.
In-home networks, the DHCP application is generally installed on your router, coming reconfigured without making you set it up. In larger environments, network administrators usually install it on a server. 

So how does it work

-When a DHCP the client is first switched on, it sends a broadcast packet on the network with a DHCP request. This is picked up by a DHCP server, which allocates an IP address to the PC, from one of the scopes (the pools of addresses) it has available. Each DHCP scope is used for a different IP network segment. On networks with routers that support DHCP, extra information is added to the request by the router to tell the server which network the request came from. The DHCP server uses this information to pick an address from the correct scope. The server replies to the client, allocating it the IP address and settings required. However, DHCP doesn’t allocate the address permanently. It tells the client that it has “leased” the address to it for a specific time period, which you as an administrator can control. By default, DHCP is installed with a three-day lease period. When the lease expires, the client can ask the server to renew the lease. If the DHCP server doesn’t hear from the client beyond the expiry of the lease period, it will put that address back in the pool ready to be re-used.

In order for a new device to get an IP address when it connects to a network, it goes through four stages:

  1. It broadcasts over the network that it is looking for a DHCP server. This stage is called Discovery.
  2. DHCP responds by offering it an IP address. This stage is called Offer.
  3. The device  responds to the DHCP server and requests the offered address. This stage is called Request.
  4. The DHCP server responds to the device and acknowledges the devices new IP address. This stage is called Acknowledge.

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