What is Peer-to-Peer

Peer-to-peer (P2P) protocol is an application that allows two computers to connect directly. It helps to avoid using a central server. In this case, ‘peers’ or nodes are equal participants of the network. Peer-to-peer meaning is the direct interaction between two computer systems within one network.
The idea of a peer-to-peer network is not as new as it may seem. The original idea of P2P appeared in the 1980s when Usenet was created. Usenet was a sort of worldwide forum. The main specific feature of this forum was that it was distributed. The next significant step in developing a P2P protocol was taken with the creation of Bitcoin. It turned out that this protocol helped to keep the network as decentralized as possible.

Principle of working

Each participant should have a certain software and an Internet connection. The software gives access to other computer systems of the network. Thus it is possible to share data or processing power directly and to search for necessary information on other computers of the network. Normally users are able to select resources they are willing to share.
The P2P protocol does not allow to divide the network into consumers and suppliers. All the participants are sharing their resources equally.
Nowadays there is a tendency to find not just peers that can provide similar resources, but unique peers that can bring exclusive abilities to the network.

One of the brightest examples of a peer-to-peer network is the Bitcoin network. This type of structure can be described as a peer-to-peer transaction blockchain. Users are able to send BTC by means of direct transactions.

Significance for the blockchain

First of all, the peer-to-peer protocol gives an opportunity to build huge distributed networks. It connects users all around the world, and only benefits from the scale of the structure.
Secondly, it promotes an idea of a distributed file storage. Suddenly, it turns out that there is no real necessity to hold all the information on one server and risk its security. Holding pieces of data in different places is safer.
Even though P2P networks are mostly applied in the cryptocurrency area, there are definitely a lot of other ways for them to be used.


The P2P protocol gives the network a number of benefits:

  • Security. Each node of the network holds information about the whole system. Even if a part of the system is attacked or blocked others can keep the rest of it alive.
  • Speed. Speed is an interesting peculiarity of this kind of networks. The more peers participate in the network the faster it gets.
  • Independence. Since each computer of the network acts on its own, it does not depend on the other participants.


In spite of all the advantages the P2P protocol brings to the blockchain, there are also some drawbacks:

  • Updating. The P2P network cannot be updated entirely at once. Each part of it updates on its own. Thus it may take quite a long time and a lot of computing power.
  • Back up. There is no central server that may have a backup. Each node makes a backup on its own.
  • Lack of control. Peer-to-peer networks are used not only in cryptocurrency. Some fields require a certain control. However, the distributed network is very difficult to control. The lack of control may raise some problems such as illegal activity.

Nowadays a peer-to-peer protocol provides a new approach to information storage and transfer. This technology brings a lot of benefits to the network such as a higher security level and better decentralization. Distributed ledgers improve existing architecture and bring it to the next level. Undoubtedly, this technology can be applied in many fields, where users have a need to exchange information or any type of assets.

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Originally published at https://simpleswap.io on May 29, 2020.



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