Understanding Peer-To-Peer Technology In Crypto World

Understanding Peer-To-Peer Technology In Crypto World
Image by Gerd Altmann from Pixabay

The peer-to-peer network is the application of distributed networks and traces its origin to the 1980s. It was first used for business-related purposes, but the concept went open to the public in 1999 with the music-sharing service Napster. In modern times, after it was opened to the general public, this technology is widely used in web search engines, streaming platforms, online marketplaces, IPFS web protocol and blockchains. Check out What is Cryptocurrency: The Ultimate Guide if you’re interested in bitcoin trading.

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Peer-To-Peer Networks

A peer-to-peer network is generally thought of in computer terms. In simple words, a peer-to-peer network is a set of computers or devices that together store and share files. Every participant in this network is called a node and is an individual peer. The novelty of the system is that all the peers have equal powers and complete the same tasks on the same platform.

If you think of it in financial terms, then it means the reciprocation of digital assets or cryptocurrencies employing the distributed network. The benefit of a peer-to-peer network is that the buyers and sellers who are the peers trade their assets without the intervention of any intermediate party. Sometimes, it is very easy to get in touch with lenders and borrowers on these platforms.

The Peer-To-Peer Principle

To continue with the peer-to-peer networking system, you need computers that sustain the distributed network. But the beauty of these computers is that they do not require a central server or administrator. All they require are the nodes, each of whom has a copy of the files to be distributed. They can even upload and download files for them. And this can easily be done because each node has its hard drives to store its data.

The network is very proficient and fast because of the ability of each node to store, transmit and receive the same files. It becomes cyber-attack proof because of its distributive structure, unlike the conventional systems.

Categories Of Peer-To-Peer Networks

There are various categories of peer-to-peer networks that are in operation today. They are:

  • Unstructured P2P Networks
  • Structured P2P Networks
  • Hybrid P2P Network

Unstructured P2P Network

This kind of network does not have any structure, hence the name unstructured network. The nodes liaise and bridge up with each other arbitrarily. This network works best with highly tumultuous activity, with the nodes often joining and leaving the network at quick successions.

Although this network requires a heavy-duty CPU and memory, they are straightforward to build. The whole network gets search queries because they need heavy-duty computers.

Structured P2P Network

The very name speaks for itself here the network works in an orderly manner, and each node can very effectively search for the data. These networks use a distributed hash table where hashes look up for the data. Maintaining this network is very costly, with big set-ups required, but the search is more efficient.

Hybrid P2P Network

Hybrid means using more than one means that is the network uses the peer-to-peer and client/server prototype on one single platform. It has an index server with the data on the locations of the resources at its center. This server is used for searches. The hybrid peer-to-peer system runs on a structured network’s centralized function and the unstructured network’s node equality system. It is hence more efficient as a networking system.

Peer-To-Peer Technology In The Blockchain

The underlying concept of blockchain technology works on the peer-to-peer system, where the transaction ledgers are shared because of the trust factor. This trust is generated because there is no third party controlling the system. This distributed ledger records all the transactions that once recorded cannot be wiped out and therefore gets its stamp of authority. 

This also marks the presence of the senders and receivers of the transactions. In this technology, the result is trusted in place of the participant.

Conclusion

In blockchain technology, the data is stored in blocks with limited storage. But once it is filled, another new block is created, thereby maintaining the chain concept. A copy of the blockchain is noted with every node, thus making sure that everyone is an equal participant. There are no hassles involved with the peer-to-peer system because of the absence of centralized authority.

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Phoneia.com (April 19, 2022). Understanding Peer-To-Peer Technology In Crypto World. Recovered from https://phoneia.com/en/understanding-peer-to-peer-technology-in-crypto-world/