What is P2P? Understanding Peer-to-Peer Technology

What is P2P? Understanding Peer-to-Peer Technology

Have you ever wondered why the crypto market continues to bloom and evolve even after many years and remains the top investment option? Many new investors, seeking profitable variants to diversify their portfolios, are reluctant to enter the digital asset market due to the common misconception that crypto equals complexity, and with a lack of knowledge in the field, one is bound to fail.

This is not the case at all. Surely, cryptocurrency is not a basic concept and initial comprehension is required, but this knowledge is not limited to a specific group of people. With enough diligence and trustworthy information sources, the cryptocurrency market becomes open to everyone.

So let us discover what is peer-to-peer network and understand the fundamental blockchain principle a bit more.

The notion of P2P aka peer-to-peer network is one of the pillars of the crypto community. These networks allow you to make cryptocurrency transfers directly to other traders without a third person involved in a transaction. In this article, we are going to explore the notion of what is p2p in a clear and simple way.

P2P networks use the decentralization principle as their basis, and the users can carry out transactions with each other – peer-to-peer – without a central server. Moreover, within the network, peers can freely communicate with other users, and no third party is involved. This makes P2P networks extremely popular among traders, as they are also efficient, and operate fast and securely. Since they lack the main server, the users are the ones who are supposed to maintain the network and serve as a type of smaller-sized server: they upload or download the files, interact with and share them with other fellow users. However, for the network to operate properly, there always must be a sufficient number of users to evenly distribute the load and keep the process going.

All P2P networks are divided into three main types:

• Structured: these networks’ structure allows to have a more simplified process of file searching. However, this centralised setup makes the network much more complex and costly to build.
• Unstructured: as it can be observed from the title, this network type lacks fixed arrangement, the users don’t have limitations and are free to join or leave as they wish. Unstructured networks are simpler than structured ones, and are quite easy to set up, yet due to the structure peculiarities they require much higher computational power so they can manage the growing number of transactions.
• Hybrid: this type combines two models at once: client-server network and P2P. They offer much better performance and possess the pros of a decentralised approach, yet simultaneously ensure centralisation for specific queries.

After we have managed to establish what is P2P network, it is worth mentioning some significant advantages and disadvantages that they might have.

Some disadvantages of peer-to-peer networks:

• Cheap: server costs are cut as this link is not needed, and users are the ones liable for network maintenance.
• Extendable: the network expands with each new user joining the platform.
• Stable: the network remains stable even when a link within the network crashes.

Drawbacks of peer-to-peer networks:

• Slower speed: each user’s performance can slow down as his/her files are constantly accessed by other users.
• Data exposure: data can be often exposed due to a lack of central control and necessary measures for illegal activity prevention.
• High processing demand: as users perform two roles and operate as both servers and clients, P2P networks often require higher processing power.

Understanding the notion and operational principle of what is P2P network is a huge first step towards understanding the processes behind cryptocurrency trading. P2P architecture is applicable in a variety of apps including popular file-sharing platforms and marketplaces. However, most significantly it is used particularly in blockchain solutions, offering users a decentralized approach, freedom and secure transactions. If you are eager to explore the exciting world of blockchain and cryptocurrency and learn more about what is P2P, then visit https://ellyx.com/ for more insights and information.