What is a Peer-to-Peer Network?

A peer-to-peer network (P2P) is a type of distributed network that first arrived in the 1980s and has continued to grow in popularity as the desire for decentralised networks grew. 

In a nutshell, a P2P environment allows people to directly interact with each other without the need for support from a third party. 

Bitcoin is one such example of an environment. The blockchain technology that supports it is underpinned by millions of different computers connected to the same network that can connect directly with each other to help verify transactions and ensure its security but, more importantly, independence and decentralised format. Other well-known examples of P2P networks include Microsoft and BitTorrent 

While earlier examples of the P2P model were either shut down or did not realise their full potential, the model was revived with the arrival of cryptocurrencies and is at the core of blockchain technology. Bitcoin creator Satoshi Nakamoto defined it as a ‘peer-to-peer electronic cash system’ built with the aim to create a P2P digital form of money that could operate independently of banks. 

To achieve this vision, Nakamoto’s vision required the use of encryption and the creation of blockchain technology to enable two parties to safely conduct a transaction. With this transaction recorded publicly for all to see, the P2P model offers a substantial security advantage, making it difficult to make changes to or falsify ledgers.

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Please note that the information in this article is not intended nor does it constitute financial or investment advice. Before making any decision or taking any action regarding your finances, you should consult a licensed Financial Adviser.

About: Andries vanTonder

Over 40 years selfemployed 

He is a Serial Entrepreneur, an Enthusiastic supporter of Blockchain Technology and a Cryptocurrency Investor

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