P2P Peer to Peer Networks and Bitcoin

In this article, we learn about peer-to-peer networks in relation to bitcoin. We also learn about two different systems that come to mind when discussing blockchain technology.

Table of contents.

  1. Introduction.
  2. Types of Peer to Peer Networks.
  3. Distributed Versus Decentralized Systems.
  4. Summary.
  5. References.


According to the dictionary, the term peer refers to a person who is equal to another in terms of their abilities, qualifications, age, background, and social status. Following this, a peer to peer in Bitcoin refers to computers that participate in the network and all have equal status. This means that all decisions come as a result of all parties or peers coming to a consensus.

Bitcoin is a peer-to-peer network built on top of the internet itself. It is managed and controlled by all peers who agree to participate. All nodes are connected in a flat topology meaning that there is no hierarchy, centralized services, the central server, or anything implying central authority. Peer-to-peer networks exhibit valuable aspects that enable them to succeed. The internet was and is still a good thing, much has been achieved through the internet(Web 2.0). And just like Web 1.0 was obliterated by web 2.0, The latter will also be made irrelevant by decentralized networks.

A decentralized network exhibits valuable aspects that are fundamental for its success. First, they are free and open for anyone to join, they are secure and immutable, and they are open and transparent while at the same time providing anonymity. Personally, it can't get any better than this, but we will see. Decentralized networks also solve a lot of issues that face various sectors such as governments, finance, capital markets, insurance, supply chains, instant messaging, voice communication, media streaming, collaboration, science and research, and high-performance computing just to name a few.

Examples of decentralized networks include Bittorrent, Bitcoin, Etherium, Napster, Skype, Gnutella, Kazaa, Limewire, Morpheus, and Bearshare among others.

In a Bitcoin network, all nodes run the bitcoin P2P protocol. Additional protocols that exist to manage aspects such as mining and lightweight wallet clients are provided by gateway routing servers that access the network using the P2P protocol and then extend the network to nodes running other protocols.
Therefore an extended Bitcoin network includes the network running Bitcoin's P2P protocol as well as nodes running specialized protocols.

Types of Peer to Peer Networks.

There exist three different types of peer-to-peer networks;

Here there is no specified organization of nodes in the network. Communication between nodes is not planned, it happens randomly. These networks are suited for applications where there is a lot of activity such as social media. In P2P social media applications such as Minds or Mastodon which are P2P alternatives of Facebook and Twitter respectively, people join and leave the network frequently. This means that more computing power,
CPU and RAM are needed to maintain the network.

These are the opposite of the former in that nodes have a specified way of communication. For example in a structured file-sharing P2P network, users search for files in an organized manner rather than randomly.

These are also more efficient and robust compared to their counterparts for obvious reasons. A drawback is that they exhibit a form of centralization since they require organization

These are a combination of structured and unstructured peer-to-peer networks. They exhibit both P2P network architecture and at the same time a client-server model. They are commonly used in networks whereby a centralized server that exhibits peer-to-peer capabilities is used.

They are more efficient and robust than the former two.

Distributed Versus Decentralized Systems.

These are systems that come to mind when discussing blockchain technology.

Decentralization involves decision-making that includes all nodes participating in the network and as such not all distributed networks are decentralized. Decentralized systems have a pool of computing power that is contributed by all network nodes. For example the bitcoin and Ethereum blockchains process transactions using computing power provided by miners. These miners are incentivized for their contributions. The more the nodes, the more secure a network is.

Pros of decentralized networks

  • Decentralized decisions
  • Flexibility of a system
  • Open to all
  • No government control
  • Transparency
  • No single point of failure

Cons of decentralized networks
These networks need a lot of computing power, this is not that severe since according to George Moore, computational progress improves over time.

Distributed systems are parts of the same system located in different locations. For example, storage platforms such as google drive and dropbox have distributed nodes that provide efficient data storage and retrieval. In distributed systems decisions can be centralized or decentralized. These provide more security since the system lacks a single point of failure, for example in the case of google drive or dropbox, data cannot be lost since a system is in a place whereby if a node fails, data is redistributed among working nodes.

Pros of distributed systems

  • No single point of failure.
  • Scalable.
  • Distributed network loads among nodes
  • Security, for hackers to attack a system, they need to attack the whole system at once.
  • Node can be centralized or decentralized

Cons of distributed systems

  • Increased complexity
  • Risk of data loss during transit.

A decentralized system is a subset of a distributed one. The difference lies in decision-making and how the decision is distributed across network peers.


We have three major types of peer-to-peer networks, structured, unstructured, and hybrid.
Decentralized systems have a pool of computing power that is contributed by all network nodes.
Distributed systems are parts of the same system located in different locations.
A decentralized system is a subset of a distributed one.
Examples of decentralized networks include Bittorrent, Bitcoin, and Ethereum among others.
Examples of distributed systems include dropbox, google drive, telecommunication networks, and WWW, among others.

With this article at OpenGenus, you must have the complete idea of P2P Peer to Peer Networks and Bitcoin.