After blockchain gradually crept into the online space, cryptocurrency became the buzzword. In a short time, users started transacting with cryptocurrencies, which were viewed as an alternative form of money. Traditionally, financial transactions have to pass through the banks, which are seen as the central authorities licensed by the governments. The question is, how did cryptocurrency bypass the existing structure and become an industry of its own without the backing of the government or a central server managed by a board of directors? The answer is “Peer-to-Peer Network,” a key component of the Blockchain System.
What is a Peer-to-Peer (P2P) Blockchain Network?
Peer-to-peer, or P2P, technology is at the core of decentralization, allowing network participants to conduct transactions without involving an intermediary or centralized authority. Connected computers, known as nodes, make these peer-to-peer networks. These nodes are primarily connected devices scattered across the globe, hence the word “peer-to-peer.” All nodes communicate with each other, perform transactions, and store transaction records, making them transparent, immutable, and unforgeable.
In contrast to a centralized client-server configuration, nodes (peers) in a decentralized system act as both clients and servers. Decentralized systems are usually faster, more efficient, and more secure because a single node can simultaneously perform the sharing and receiving functions.
Types of Peer-to-Peer (P2P) Networks?
There are different architectures for connecting nodes that form a P2P network, eventually influencing their mode of operations and effectiveness. Below are the three types of peer-to-peer networks:
- Structured peer-to-peer network
- Unstructured peer-to-peer network
- Hybrid peer-to-peer network
1. Structured Peer-to-Peer Networks
Structured P2P networks have data arranged structurally, enabling effective queries or access to data. Nodes in this type of network are organized, making communication efficient. Despite the ease of access to data, setting up this type of network can be stressful. This network’s structure serves as its downside since an organized data structure comes with some sort of centralization, unlike the unstructured network.
2. Unstructured Peer-to-Peer Networks
Network participants (nodes) can join or leave as they please since there is no rigid or restrictive structure. The absence of structure allows random communication between nodes. In order to power a large number of transactions, all nodes must be active, i.e., a large amount of CPU power must be maintained on the network. Generally, they aren’t as efficient as the structured network.
3. Hybrid Peer-to-Peer Networks
These are usually a combination of peer-to-peer and client-server networks with a central server. The central server can locate a node, but the hybrid rarely performs better than its two counterparts.
Benefits of a P2P Blockchain Network
The activeness of nodes or peers in the P2P network cancels out the possibility of a single point of failure (SPOF) as it is with centralized servers. Compared to the traditional client-server architecture, peer-to-peer networks offer additional benefits, which are listed below:
- In contrast to client-server architectures, which experience “server not reachable” delays whenever the central server goes down, peer-to-peer networks are always accessible.
- In a peer-to-peer network, each computer manages itself compared to the general maintenance needed for a centralized server. As a result, setting up and maintaining the network is quite simple.
- P2P networks are economical; they lower operational costs since they are easily scalable and do not need a network operating system.
- Users can easily download or interact with the servers in closer proximity, which is faster than traditional client-server systems since files are distributed across many nodes (computers).
- Since each node transmits, receives, and stores data, P2P networks become more efficient as the number of nodes increases.
- Due to their decentralized nature, peer-to-peer systems are resistant to cyberattacks.
- The P2P architecture in cryptocurrency and alternative finance, such as DeFi, limits the power of the traditional financial system while offering resistance against censorship from the government and central authorities.
- It is nearly impossible for an attacker to add a false block of information or edit the already added records due to the need for most nodes to establish consensus before adding data to the blockchain (immutability of records).
Conclusion
The peer-to-peer network isn’t a new concept; blockchain has only embraced it and brought it to the forefront. With blockchain technology growing and being adopted in different sectors of the economy, peer-to-peer networks will also grow in popularity and be applied to various fields beyond being a key component of blockchain technology. As a result, Blockchain has led the way, and it is a welcome development.
Identity.com
Blockchain is the future, and it is impressive to see Identity.com contributing to this desired future through the Solana ecosystem and other Web3 projects. Also, as a member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.
Identity.com, as a future-oriented company, is an open-source ecosystem providing access to on-chain and secure identity verification for businesses, giving their customers a hassle-free experience. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Please refer to our docs about how to help you with identity verification and general KYC processes.
