Peer network | What is Peer to Peer (P2P)? - Virtual Money Blog

What is Peer to Peer (P2P)?

You've probably heard somewhere about peer-to-peer (P2P) phrases but don't understand exactly what they are. You may think this is a new technology product.

But no, in essence the concept of P2P network architecture first appeared in 1969. And the initial use of P2P networks in business was introduced in the early 1980s.

Therefore, in this article, Blogtienao will explain to you what a peer-to-peer (P2P) network is; and what are the benefits and harms to the cryptocurrency industry.

What is a peer-to-peer network?

Peer to Peer (P2P) is a computer system that connects to each other via the Internet, and shares data without a central server. Peer-to-peer computer networks use distributed (decentralized) architecture.

In other words, the P2P network does not distinguish between the server and the client.

Peer to peer in the cryptocurrency industry

In the cryptocurrency industry, the term P2P is often used to refer to the trading of cryptocurrencies or digital assets via a decentralized network.

P2P in computer science

The P2P concept is applied to many different uses. Not only for exchanging files, but also for exchanging information between people. Especially in cooperative situations between a group of people in the community.

Peer network (P2P)

How does the peer network work?

As mentioned above, a peer network does not have a server and a client. Instead, each node holds a copy of the files, acting as the client and server for the other nodes.

So in essence, a peer network is maintained by a distributed network of users.

On P2P networks, devices use software applications designed to mediate data sharing. When you want to find and download files, users can send search requests to other devices on the network. And once a file has been downloaded, they can act as its source.

In other words, when downloading a file from node A, node B will act as a client. When node A downloads a file from node B, node B will act as the server.

Some common industries / services apply P2P networks

  • Cryptocurrencies like: Bitcoin, Ethereum, ...
  • Lending (P2P Lending)
  • Rentals (homesharing)
  • Online buying-selling platform
  • File sharing
  • Open source software

Peer network classification

P2P networks are divided into 3 categories:

Unstructured P2P network

Unstructured P2P network

This is the type of P2P network in which nodes are randomly set. This type of network is resistant to some nodes frequently joining and leaving the network.

However, although it is easier to build than a structured P2P network, they use higher memory and CPU. Because when searching for content, the search request will be transmitted across the network to find as many sharers as possible. This makes the network always filled with search requests.

Besides, unstructured P2P networks cannot guarantee the search of an asset will be successful

P2P network is structured

The peer network has a circular chord structure.
The peer network has a circular chord structure.

This is the type of peer network where nodes are built according to a specific structure. Allows buttons to search files quickly, even if the content is not popular.

In addition, the structured P2P network used the DHT (Distributed Hash Table) system to overcome the unsuccessful finding disadvantages of unstructured P2P networks.

Although highly effective, a structured P2P network has a higher level of concentration. In addition, the cost of setup and maintenance is higher.

Hybrid P2P network

This type of P2P network combines a traditional structure (server and client) with a peer-to-peer network structure.

Compared to the above two types of P2P networks, hybrid networks are easier to build. In addition, they also inherit all the advantages and better performance.

The role of P2P in Blockchain

Role in Blockchain

Peer network structure (P2P) in Blockchain is a factor that helps the trading of cryptocurrencies without having to go through intermediaries.

Therefore, no bank or central server can control the transactions. Instead, use a ledger called Blockchain to publicly record all transactions.

Besides, the buttons will assume different roles. For example, full nodes help maintain network security. This is done through verifying transactions according to consensus rules.

Useful features that Peer to Peer brings to the cryptocurrency industry

  • Incognito
  • Able to bear the Byzantine fault
  • There is no charge for 3rd parties
  • Security, high scalability
  • Against the control of governments
  • Although one part of the system has an error, the other is still unaffected

Some limitations of P2P on Blockchain

Because there is no central server, writing transactions to Blockchain requires a large amount of computational power. This significantly reduces performance; is the main obstacle to expansion and wide adoption.

The nature of peer networks is decentralized and decentralized, so they are difficult to control and regulate in the case of investigating crimes such as money laundering ... These are essentially both advantages and disadvantages of peer networks.

Besides, when the event takes place hardfork (splits a string into two new chains in parallel). Due to the nature of most blockchains it is decentralized and open source. So if not good security, the two networks can be attacked replay (Replay Attack)