Bitcoin cryptocurrency technology is known as a P2P network, which is a decentralised network that connects different devices, and users can store their information and share the same through this secured network. Each node of this network works as an individual server, and such nodes have a storage capacity. Many businesses are using P2P networks for their administrative work, where their employees can hold equal power to perform identical tasks.
What is Peer-to-Peer Technology? An overview
Bitcoin and other cryptos are using the P2P network for exchanging virtual assets, which are commonly known as cryptocurrencies. In this network, buyers and sellers can place their orders and make their transactions without using any centralized server or bank. Apart from that, you can find some centralized exchanges of cryptocurrencies that are using P2P networks to connect buyers with sellers.
People may think that peer-to-peer network is only used for blockchain technology for crypto transactions, but you can find P2P networks in various industries like streaming platforms, InterPlanetary File System (IPFS) web protocol, web search engines, and online marketplaces.
Is Peer-to-Peer Technology illegal?
A P2P network is completely legal, but it depends on the usage and purpose of this network. For example, you can share media files like music and information through the P2P network installed in Napster and Gnutella, and you can only transfer your files through these platforms if you are the copyright owner. On the other part, if you share or download copyrighted files from a P2P network then it will be considered an illegal activity.
Functioning of Peer-to-Peer Technology- An Overview
Bitcoins and other cryptocurrencies are using a peer-to-peer network because it does not require any administrator. For example, Bitcoin is based on a P2P network where each user of this coin holds a copy of the files, and they are considered as a server as well as a client.
In the case of a centralised server, each user can upload and download the files from the server through a peer-to-peer network, and you can use a centralized server to share and download your files. There are three types of P2P networks available, such as hybrid, structured and unstructured.
- Hybrid P2P: It is based on a client-server model where different devices or computers are connected through a P2P network. Users can share their files through this network from their devices. It can improve overall performance, as it can provide advantages to structured and unstructured platforms.
- Structured P2P: It is based on an organized architecture where peers can search for their specific files on the P2P network, and they can also search for such information when related content is not widely available. It requires high maintenance and setup costs because you need to use a centralized server for the same.
- Unstructured P2P: It is used for cryptocurrencies where a high level of CPU power and storage capacity is used.
Peer-to-Peer in Blockchain- What to know
Nakamoto, the founder of bitcoin, introduced BTC as a P2P Electronic Cash System. In the case of the bitcoin P2P network, users can send their coins to another account through a decentralized network, and there are no third-party services like a bank or government needed as an intermediatory or custodial authority of this coin.
Apart from that, a peer-to-peer network installed in the blockchain can also maintain a distributed ledger where all transactions made with bitcoins are stored, and people can access such data from anywhere. As you know, you can buy, sell or trade bitcoins and other cryptos from anywhere at any time, and it is possible due to this peer-to-peer network only.
The main intention of Nakamoto was to introduce an alternative currency that can be transferred without any intermediator. You need to use your bank server to transfer your fiat currency and you cannot initiate a transaction or complete your transaction if your bank is denied it from their end. To avoid such complications, Bitcoin has introduced the blockchain P2P where people can send and receive funds without any bank.
Conclusion
Finally, when it comes to peer-to-peer technology, you do not need to visit your bank branch to make a transaction and you can use your digital wallet to initiate a. Lastly, if planning to start Bitcoin trading, read more to make the most out of your crypto investment.