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I obviously know how to create subdomains via CPanel but does anyone know what exact method CPanel uses to achieve this?

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The server's WHM configuration allows cPanel to utilize either BIND or NSD as its DNS daemon: when a cPanel user adds a subdomain, corresponding DNS records are created in BIND or NSD.

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I have no idea what BIND or NSD is guess I'll have to look into them. Many thanks for your answer – aciid Jan 14 '12 at 5:03
@aciid In the interest of familiarizing with the technologies behind cPanel, you might want to read up on DNS and virtual hosting - then you can read about the daemons used by cPanel – danlefree♦ Jan 15 '12 at 6:43

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