A static IP address is a number (in the form of a dotted quad) that is assigned to a computer by an Internet service provider (ISP) to be its permanent address on the Internet. Computers use IP addresses to locate and talk to each other on the Internet, much the same way people use phone numbers to locate and talk to one another on the telephone. When you want to visit whatis.com, your computer asks a domain name system (DNS) server (think telephone information operator) for the correct dotted quad number (think phone number) for whatis.com and your computer uses the answer it receives to connect to the whatis.com server.
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It would be simple if every computer that connects to the Internet could have its own static IP number, but when the Internet was first conceived, the architects didn't foresee the need for an unlimited number of IP addresses. Consequently, there are not enough IP numbers to go around. To get around that problem, many Internet service providers limit the number of static IP addresses they allocate, and economize on the remaining number of IP addresses they possess by temporarily assigning an IP address to a requesting Dynamic Host Configuration Protocol (DHCP) computer from a pool of IP addresses. The temporary IP address is called a dynamic IP address.
Requesting DHCP computers receive a dynamic IP address (think temporary phone number) for the duration of that Internet session or for some other specified amount of time. Once the user disconnects from the Internet, their dynamic IP address goes back into the IP address pool so it can be assigned to another user. Even if the user reconnects immediately, odds are they will not be assigned the same IP address from the pool. To keep our telephone telephone analogy going, using a dynamic IP address is similar to using a pay phone. Unless there is a reason to receive a call, the user does not care what number he or she is calling from.
There are times, however, when users who connect to the Internet using dynamic IP wish to allow other computers to locate them. Perhaps they want to use CU-SeeMe or use a VoIP application to make long distance phone calls using their IP connection. In that case, they would need a static IP address. The user has two choices; they can contact their ISP and request a static IP address, or they can use a dynamic DNS service. Either choice will probably involve an additional monthly fee.
Using a dynamic DNS service works as if there was an old-fashioned telephone message service at your computer's disposal. When a user registers with a DNS service and connects to the Internet with a dynamic IP address, the user's computer contacts the DNS service and lets them know what IP address it has been assigned from the pool; the service works with the DNS server to forward the correct address to the requesting DHCP computer. (Think of calling the message service and saying "Hi. I can be reached at 4184.108.40.206 right now. Please tell anyone who tries to reach me to call that number.) Using a dynamic DNS service to arrange for computers to find you even though you are using a dynamic IP address is the next-best thing to having a static IP.
IPv6, which has also been called "IPng" (IP Next Generation), lengthens IP addresses from 32 bits to 128 bits and increasesthe number of available IP addressess significantly, making static IP addresses easier and less expensive to obtain and maintain.