Digital Keys
Almost all software nowadays incorporate a password-like parameter one has to enter before the program installs. This can vary in length, from a 4 character pin, to a paragraph of gibberish. Most common are 20 characters. There is no specific right or wrong key. Each time one is entered, the software performs a series of calculations within its mathematical framework. These verify if the key entered correspond to certain parameters. These are not simple. One can stare at a page of valid keys, not being able to detect a pattern. This is the magic and mystery of software keys. When first incorporated, piracy was at a standstill. Companies could place their products on the website for anyone to download, but it would be useless for those who did not have a key.
Offline vs. Online
Many software keys are designated for offline. All verification code is embedded in the installer. Anyone with a valid key is able to use the software. There can potentially be 1337 users running on the same key. Pirates could find one working combination and relay it to all.