What is Peer-to-Peer (P2P)?
Peer-to-Peer (P2P) refers to a decentralized network model where participants, or ‘peers,’ share resources and communicate directly with each other without a central coordinating authority. This concept applies to both network structures and trading methods in various contexts.
P2P in Network Context
- Decentralized Networks: Each node (peer) in the network acts both as a client and a server, sharing resources like bandwidth or storage.
- Resilience: P2P networks are robust, with no single point of failure.
- Scalability: Efficiently manages increasing loads by distributing them across numerous peers.
P2P in Trading
- Direct Transactions: Involves the exchange of assets (like cryptocurrencies) directly between individuals without intermediaries.
- Privacy and Control: Offers enhanced privacy and more control over the terms of the trade.
- Flexibility: Allows for a wide range of payment methods and can facilitate bartering of goods and services.
P2P Networks in Blockchain
- Distributed Ledger Technology: Blockchain is a type of P2P network where transactions are recorded on a distributed ledger.
- Decentralization: Enhances security and resilience against attacks or censorship.
P2P Trading in Cryptocurrency
- Platforms: Specialized P2P platforms facilitate direct transactions.
- : Can be used to automate and secure the trading process.
- Global Access: Enables global trading without the need for traditional banking infrastructure.
- Network Challenges: In P2P networks, ensuring consistent performance and handling malicious nodes can be complex.
- Trading Risks: In P2P trading, risks include fraud and the need for dispute resolution mechanisms.