DHCP and NAT: What is the Difference?

DHCP and NAT are integral parts of a network, no matter the size and complexity. However, sometimes they are incorrectly associated as interchangeable with or related to one another regarding network configurations. Other times they are confused as performing a similar function with a network. These misconceptions, incidentally, couldn't be further from the truth, as any network administrator would attest. Although DHCP and NAT each deal with IP addresses and share the word 'dynamic' in how they perform some of their respective functions, they are quite different from each other.

The choice between implementing and using DHCP or NAT — or both — depends mainly on the needs of the network, its size and complexity, and the number of devices on the network. Even within a simpler home network, it is not uncommon to see both DHCP and NAT working together to provide a connection to the internet. 

Before deciding whether to use DHCP or NAT, what each one does, how they work, and what functions they perform within a network, is essential.

Dynamic Host Configuration Protocol

Dynamic Host Configuration Protocol (DHCP) is not a new way for hosts to connect to a network (in simplest terms, a host is a device used on a network). Dating back to 1993, DHCP was created as a network management protocol used to configure devices by automating the assignment of internet protocol (IP) addresses. DHCP can be configured on a router or switch, but a common use is a centralized DHCP server.

In a home network, connected devices might have their IP addresses assigned manually, which is manageable with only a few devices. In an extensive network that spans an entire complex, or even across geographical regions, with thousands of hosts needing a unique IP address, manually assigning these would be an almost impossible task. DHCP servers handle these IP address assignments. They dynamically manage the process of these assignments as no two hosts on a network can have the same IP address.

DHCP servers need access to an IP address pool, which are all the IP addresses the network can assign to hosts seeking to gain network access. Each time a host makes a request on the network, the DHCP protocol engages in the client/server process. When the DHCP server receives a request, it sends back the IP address that it assigned to the host for use on the network.

There are likely many DHCP servers that allow for deeper IP address pools in a more extensive network. These IP pools enable the hosts to receive multiple offers of IP addresses to use. This process is called fault tolerance. Fault tolerance, in general, is the ability of a system to continue functioning in the event of an error. Within a network, fault tolerance is achieved by providing multiple IP address options for a host to choose from if one or more of those IP addresses fail.

While DHCP's primary function is the distribution and management of IP addresses, it provides other functions on a network. Without the following information, also handled by DHCP protocols, hosts would not be able to connect to a network:

• Subnet Masks - The subnet mask is a 32-bit address that differentiates between a host and network addresses. The TCP/IP process, which determines how data is exchanged over the internet, uses the subnet mask to determine which part of an IP address is on the local subnet or a remote network.

• Default Gateway - The network router(s) use the default gateway to send data packets - a packet is a small amount of data sent over networks - outside of the network. If a device is unsure of the packet destination, the default gateway provides the path for this information.

• Domain Name Server (DNS) Address - The DNS is a mapping process used to crosswalk alphabetic names to numeric IP addresses. An example is www.amazon.com. DNS translates this to the machine-readable IP addresses of 192.0.2.44.

DHCP and DHCP servers significantly make network management more accessible and streamlined, are ideal for large and complex networks, and eliminates IP address conflicts.

Network Address Translation

Network Address Translation (NAT) translates many private IP addresses on a network to a public address before sharing information with an external source. The most common (and intended) use of NAT limits the number of public IP addresses required on a network. This has the dual benefit of being more economical with IP addresses and increasing overall network security. 

NAT takes packet requests from a device (a laptop or mobile device, for example) to the router and changes the outgoing IP address from a private one to a public one. This IP address conversion is an essential process. Without this happening, the information returning to the device from the receiving router won't know where to send the data if the IP address remains private.  

NAT usage is common within many network configurations, no matter the size or complexity. Within a network, users or administrators may notice NAT types shown as open, moderate, or restricted. These are different ways that NAT configurations allow or restrict information flowing to and from the network. When a NAT is employed within a network (public or private), the configuration is typically one of three different types: Static, Dynamic, and PAT.

• A static NAT uses one public IP address with the router or the device the NAT uses to connect to the internet. No matter how many times the NAT process converts a private local address to a public one, it will be the same IP address, hence why it is called a static NAT.

• A dynamic NAT does the opposite of a static NAT, as the name implies. Instead of the same IP address upon conversion from public to private, the NAT chooses the public IP address from an IP address pool each time the IP address translation occurs.

• A Port Address Translation (PAT) is another type of dynamic NAT. The main difference between a PAT and a dynamic NAT is that PAT combines or bands many local private IP addresses into a public one. A PAT configuration is more common in larger networks and organizations and often requires implementation and management by a network administrator.

Many networks choose to use NAT as, no matter which type of NAT is employed, this reduces the number of IP addresses needed for the ever-growing number of devices that need to connect to the internet. With IPv4, which is the technology that allows devices to connect to the internet, NAT use was almost essential as the number of IP addresses was limited as internet usage grew exponentially. 

Even with IPv6 becoming more common and widely used, and the increase in IP addresses available for a network, the number of devices worldwide far surpasses the maximum number of IP addresses available. Eventually, IPv6 may replace the need for NAT. But for now, employing NAT in a network allows many devices to connect to a network using one IP address.

Using DHCP and NAT

To summarize, DHCP provides network IP addresses to the devices (hosts) connected to a network. DHCP connections are between the host and the server, typically within the network. NAT takes many private IP addresses and converts them to a public one before sending data out of a network and to the internet. NAT connections are between routers. DHCP and NAT work independently from each other but tend to work very well together to manage IP addresses and increase network security. 

Choosing to implement DHCP or NAT comes down to what a network needs and what the devices need from the network. DHCP and NAT are inherently separate from each other and perform different functions within a network. However, they are both found in many different network configurations.