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Role of Peer-To-Peer Technology In Bitcoins- Here Is An Overview

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Peer-to-peer networks are distributed networks that exchange and share data, information, or assets among parties without any interference from a central authority. In other words, it involves decentralized interaction between groups and individuals. People use it largely in networking and computers, and virtual trading currencies. 

In simple words, a peer-to-peer network ensures the digital asset you are trading on platforms like http:/ are secure and free of complications. If you are curious to know more about the involvement of peer-to-peer networks in bitcoin transactions, read on further.

Firstly, What Is A Peer-To-Peer Network?

A peer-to-peer network refers to a decentralized communication model that connects one node with the other. As a result, it is easy to communicate without the help of a central server. Moreover, unlike the leecher or seeder, where the server/client model needs a seeder to make a request and a leecher fulfills the request, the network allows each party to act as a seeder and leecher. 

This means after the formation of the network, any of the participants can store and share files without using any help from the intermediary. 

The workings of the P2P network are also simple as the users are responsible for looking after the distributed network themselves. Each node has a file copy within. Thus, they act as a server and either download files from the other nodes or upload them to them. This work separates them from the traditional client-server setup.

Different Types of Peer-To-Peer Networks

Now that the working of the network is clear, let us understand its different types by considering their architectural difference:

What Is Structured Peer-To-Peer Network?

Structured networks, as suggested by the names, are organized ways to allow nodes to carry searches efficiently even if there is not much data available. At times, this type of network introduces a distributed hash table, which helps the nodes search for information using hash functions. Another point to note here, while structure networks can control traffic efficiently, they involve high maintenance costs, higher setup, and are more centralized. 

What Is Unstructured Peer-To-Peer Network?

On the other hand, the nodes are connected randomly in an unstructured network, and there is no fixed way of communication. Moreover, since multiple nodes join and exit the network, the system leads to high churn activity. For instance, a platform on social media deployed on an unstructured P2P network can make use of it efficiently.

Not to mention, this network type is effortless to build. However, it requires high memory usage and CPU power as the entire network receives the search queries. Thus, if only a part of the computer is working, knowing what you are searching for may take time. 

What Is Hybrid Peer-To-Peer Network?

Next comes the hybrid peer-to-peer network where both the peer-to-peer and client models work on the same platform. In simple words, the hybrid peer-to-peer network captures every inputted data using an index server.

In addition, a hybrid network involves the centralization functionality of a structured network and node equality of the unstructured network to make a trade-off. When compared, this network type performs better counterparts. It’s because search queries require centralized functionality and the advantages of the decentralized network at the same time. 

Role of Peer-To-Peer Networks in Blockchain

There are many reasons to highlight the role of peer-to-peer network in the blockchain. The network makes the worldwide transfer of cryptocurrencies possible. For this purpose, it also does not need intermediaries or middlemen. Anyone who wants to build a bitcoin node can do that by verifying and validating blocks.

Advantages and Disadvantages of Peer-To-Peer Networks In Blockchain

  • P2P network can protect the blockchain from breaking down. So, even if one peer gets down, the others are still present. 
  • This network arrangement offers much better security than the traditional client-server network.
  • It is highly available due to the decentralized process.
  • It protects the network from Denial-of-Service attacks. 

However, the only problem that peer-to-peer networks face is requiring too much computational power. 


Besides the factors mentioned above, the peer-to-peer network helps the file-sharing networks that the crypto trading platforms use with ease. Last but not least, a peer-to-peer network works as the core of the blockchain system and assures seamless bitcoin transactions. Most importantly, it provides increased security and eliminates third-party dependency. 

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Patrick Lee