In the world of IP addressing there are 2 main types of IP addresses, static and dynamic.
A static IP address is an address that does not change over time unless changed manually. It is used when you need the IP address or network location to remain the same consistently. A good example of this is for a web server. If you go to www.google.com you are really going to the IP address of 66.102.7.99. If this were to change suddenly you would not be able to get to Google unless you knew the new IP address or until Google updated their DNS records.
A Dynamic IP address is an address that keeps on changing. It is mostly used when having a consistent IP address is not necessary. An example of this would be the IP address your ISP (internet service provider) assigns you when you log on to the internet. You must have an IP address to surf the web but once you disconnect you loose that address. Then the next time you sign on you are assigned a new one. This is done using DHCP.
To configure your IP address in Windows you can right click on My Network Places and choose Properties. Then right click on your network connection and choose Properties again. You will see the properties window for that particular connection with all the protocols and clients that you have installed.

If you click on Internet Protocol (TCP/IP) to highlight it and then click on the Properties button you will see your IP address configuration. A static IP address configuration will look something like this.
Notice how all the settings are filled in with specific numbers that you assign.
A computer configured for dynamic IP addressing will have its TCP/IP properties look like this.
In this example the connection is set to use automatic IP addressing and get its IP information from a DHCP server or other DHCP device like a DSL router.
For information on how to find your IP address and what type you have click here.
Related Tips:
How to have both static and dynamic IPs settings at the same time
How to Find Your IP Address
How DHCP WorksWhat is Ethernet?
Windows XP Network Diagnostics Tool
Reinstall TCP/IP on Windows XP
What is DNS?
Setting Up a Cable/DSL Router With Wireless
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