Blockchain and Peer to Peer Technology : We all know that cryptocurrencies, such as bitcoin are based on blockchain technology, and, it is a decentralized network known as a peer-to-peer network, in short P2P. But, how does this technology work? P2P is a network that is structured with a group of nodes and each node is considered an individual peer. Here, all nodes have equal power and they cannot be controlled by any central authority or server.
There are three types of peer-to-peer technology models available, such as structured, unstructured, and hybrid modes. In the case of an unstructured network, you can find such nodes perform and connect randomly and they are insufficient that other P2P models. On the other part, nodes can perform in a structured way and they can search the network to collect the data in a structured P2P model. Now, you need to know the basics of a P2P model that runs behind the blockchain technology, and here you can find such details:
- How it is different than a traditional server: You might have several bank accounts and you can transfer funds through your account. Here, you need to use the dedicated server of the designated bank. So you have to rely on your bank to transfer your funds. On the other part, P2P is a decentralized network where each node can perform independently and you do not need to use any third-party server for such transactions.
- Blockchain is a P2P network and all cryptocurrencies are based on this network. You do not need to depend on a bank or central authority to validate your transactions and any user can invest his or her funds from any corner of the world in crypto through this network.
- Apart from that, there is no bank or designated branch available for crypto which can validate your transactions manually from their server. So, you do not need to visit your bank to send money to a foreign account. People around the world can participate in the crypto mining process and they can validate such nodes to add a new block to the blockchain. These professionals are known as miners and they will get rewarded once they validate a transaction and add a new block to the network successfully.
- A blockchain and P2P network is a decentralized network where all computers are connected in the same way. People can use their devices to access the ledger, which is known as a public ledger where all transactions are stored, and they can check such data from their device. On the other part, you cannot find such details in your bank account because such transactions nodes are stored in a private server of the bank and they can only access and control such data.
The benefits of a P2P network
- You can find some issues in your bank server and you can find it down most of the time. In the case of a P2P network, you cannot face such issues because if one peer is not working then other peers will run the network.
- P2P networks are secured. In the case of a cloud server, you can use some third-party servers like AWS or Google Drives, but a peer-to-peer network does not depend on any third-party server. That means, it cannot be regulated by any company, bank, or government.
- P2P network is safe from Denial-of-Service (DoS) attacks. People may think that blockchain technology is an open-sourced software that cybercriminals can enter easily and they can steal the funds from crypto accounts associated with wallets or exchanges. But, it is 100% secured and no one can perform malicious activity on this network.
But, there are some disadvantages of this network. It requires some computing power and it can drag more energy than central servers. So, it can harm our ecosystem. Nowadays miners are using solar systems and advanced devices to save energy, and such issues will be solved.
Choosing the best platform for investing in crypto is a daunting task because all investment platforms are based on the same blockchain technology. Make sure, you must gather some information about a crypto ecosystem, blockchain, and P2P network before you invest in crypto.