A peer-to-peer network - sometimes abbreviated as P2P - comprises two or more computers that connect to each other and share their resources without going through a separate server. These networks are connected by a physical wire, virtually in the cloud, via WiFi, or just over the regular internet.
P2P networks are critical for cryptocurrency and blockchain. Under these schemes, there is no central server organizing traffic according to a predefined set of rules. Instead, individual computers interact with each other, acting as their own miniature servers as nodes in the network.
P2P networks seem like a new invention because of their current popularity, but they actually date all the way back to the 1980s. These networks allowed engineers and companies to perform tasks that would have taken a single computer weeks or months to complete. Eventually started wiring terminals together so that they could access each others’ drives. This development allowed employees to quickly transfer files from one computer to another instead of carrying around floppy disks.
You can think of PCs in the P2P network as being both a client and a server. They’re clients in the sense that they can draw down information from the system as a whole. And they are servers in the sense that other PCs can access their data. For instance, if user B wants access to a file on user A’s computer to print it out, they can easily retrieve it, and vice versa.
What’s fascinating about P2P systems is that there is no central operating system conducting everything that happens on the network. Unlike under traditional setups, servers are not running special server-side applications designating who can have access to what. Under a P2P scheme, all access rights are determined by the sharing permissions on individual machines.
Office P2P systems usually operate over Ethernet or Fast Ethernet. This provides the bandwidth to share large files.
While the roots of P2P systems go back a long way, the real reason they’re so exciting is how they relate to the blockchain.
You can think of the blockchain network as a protocol that operates on top of a P2P network of computers. All of the terminals in the system work together to create an identical record of information (also called a ledger). This process then creates an immutable record that an outside force can’t change.
The fact that the blockchain runs on a P2P network is critical for its function. If there was a central server, it would be at a much higher risk of being hacked. But since cybercriminals would need to compromise more than half the network under a P2P regime, that becomes far less likely. And so P2P is the natural model for any secure, decentralized system.