Domain names are at their most basic a series of numbers, humans find it hard to relate to these and the DNS or Domain Name System is used to translate from one format to another
The format of IP address is made of up four octets for example 66.71.242.98, a domain name has a number of elements to it including what are called Zone records. The two records that control web traffic are the "A record" and the "www" record - there are normally set to the same IP but it is possible to set the separately.
The A record controls the format http://discountdomainsuk.com whilst the www record the more family http://www.discountdomainsuk.com.
There are other records on a domain name which have other important functions such as the MX also known as Mail Exchange records which control how mail is handled.
Hosting companies such as Discount Domains (one of the top UK providers) use what are known as DNS servers, there are always two known as the primary and secondary DNS servers but there can be more.
The function of these servers is to convert domain names into IP's so the hosting servers know how to respond to either web queries or emails.
Customer accounts on a shared server are allocated into accounts and each account is given and IP address and a domain name, the job of the DNS servers is to correctly match the web and mail incoming traffic traffic to the correct account.
There is hosting server software included with Microsoft Server software, so if you have for example MS exchange you can probably host your own website.
You'll need to get a dedicated / static IP from your Broadband provider (ISP) if they provide them some such as Sky don't.
It's certainly the cheapest option, but bear in mind that hosting companies like Discount Domains have back up generators, 24 hour support and multiple ISP connections. If any of that fails, then your website and mail will be offline.
So whilst it might work for a home website, it is unlikely to be practical or suitable for a commercial website.
Adrian Lawrence is a webmaster with Discount Domains a top UK ISP.
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