Decentralized technologies have existed long before cryptocurrencies gained popularity. P2P networks are the foundation of modern blockchains. In the article, we explain to you what peer-to-peer networks are and where they are used.
What is network architecture
Network architecture is the principle by which information is exchanged on the Internet. There are two main types of architectures: client-server and P2P.
When you communicate with someone in person, you exchange information directly. But if you chat on WhatsApp, the process turns into a long chain of actions. Two steps in this chain include changing the color and number of checkmarks under each message. The server here is a messenger that stores, processes and transmits information. And the client is the correspondent (s) who sends and receives information.
In the WhatsApp example, the architecture is called “client-server”. This is the most common type. Since the 1970s, all sites on the Internet have operated this way.
An alternative to this method is a network in which people communicate with each other without an intermediary. On the Internet, such an architecture was only implemented in the 1990s. Each device in such a network can simultaneously act as a server and a client. This architecture is called P2P or “Peer-to-Peer”. There is no central element and information is transmitted directly. Let’s take a closer look at P2P networks.
What does equality have to do with anything
If your friend needs to transfer things, but it is impossible to do so personally, you have to contact an intermediary. You pack your things and hand them over to the courier, the courier takes the things to the right address, and your friend picks them up. Each person in this chain has their function. If this happens on the Internet, it is said that each node in the network has its role.
P2P networks became popular thanks to the first file-sharing programs. The principle of their work is that users can share access to the selected files on the computer. Using search, any user can find the necessary files from another member of the file-sharing network and download them directly.
The most famous example of a file-sharing network are torrent programs for exchanging files using the protocol BitTorrent. The network differs from others in that files are transferred in chunks. Each client, downloading parts of files, at the same time uploads them to other clients. This reduces the load and relevance of each node.
But what about “without a server”
Now let’s imagine that a friend needs to send money. The modern payment system is centralized. Banks are involved in the processing and registering of all transactions. People pay banks to act as intermediaries and keep their money safe and secure.
Blockchain is being used to create a P2P payment network that can be regulated without outside interference. Each node stores a copy of the blockchain and compares it with copies of the rest of the nodes to ensure the data is accurate. Thus, the network responds quickly to any malicious activity or inaccuracy.
This technology was first described in 2008 when Bitcoin was created. Developers call their cryptocurrency “a P2P Electronic Cash System”. Sending bitcoins to another wallet means creating a record that the owner of the cryptocurrency has changed. For the entry to be considered correct, it must be confirmed by other network members. Thus, it is possible to do business without the intervention of an intermediary with a higher authority.
Where else is P2P used
P2P was invented by IT specialists, but economists also use a similar approach. In the field of finance, this term refers to the exchange of digital assets without intermediaries. P2P platforms connect buyers to sellers and lenders to borrowers.
P2P exchange Bitzlato is a message board for buying and selling cryptocurrencies. Users find each other and determine the terms of the deal personally. For example, you can find a person who wants to sell bitcoin at the current rate and receive money to a credit card. Bitzlato will only help protect the transaction by blocking the cryptocurrency for the duration of the transaction. Regular exchangers are less profitable, as they overprice the charges and charge commissions on each transaction.
Peer-to-peer architecture is an alternative to the client/server model. This technology provides security, decentralization, and censorship resistance. P2P has served as the basis for the creation of file-sharing services, cryptocurrencies, and many decentralized applications.