Peer-to-Peer (P2P)

What’s a P2P Network?

Peer-to-peer (P2P) networks do not have a central server or authority that facilitates the management of its communications. Each user contributes in effort to help keep the entire network running smoothly, and all members of this network are considered equal and have the same amount of privileges.

P2P is extremely important when it comes to cryptocurrency and blockchain, as it is aligned with one of the core tenets — decentralisation. It removes the need for a central authority and creates a mutually beneficial system with participants acting equally.

P2P is one of the main ways Bitcoin operates. In the Bitcoin white paper, named ‘A Peer-to-Peer Electronic Cash System’, Satoshi Nakamoto talks of allowing for payments to move from one user to another without the use of a financial institution. Bitcoin functions as a true P2P system with the goal of eliminating the need for third-party financial institutions as intermediaries, instead having peers work together to secure the network and ensure it works smoothly.

Key Takeaway

In a peer-to-peer (P2P) network, each user is a member of and contributes to the network, sharing data and/or tasks.

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