Licensing model for my application

Experts, currently I have been gathering ID's from the customer machine and doing some hashing and calling that the reg key. Then they send that to me and I provide the license key. When the application runs it checks everything and validates the license key. But how can I avoid this back and forth and simply provide a license key delivered with the application. How does the application know? How does it only work with that one installation of the application? I would also like the license key to provide information to the application like demo or full version.