Peer-to-Peer (P2P)

Peer-to-peer (P2P) describes a network in which participants — “peers” — connect and transact directly with each other, rather than routing everything through a central server or intermediary.

How it works

In a P2P network every participant is both a client and a server, sharing data and workload across the group. Cryptocurrencies are built on this model: nodes relay transactions and blocks to one another, and the ledger is maintained collectively instead of by one company. There is no central point that has to be online — or trusted — for the network to function.

Why it matters

The peer-to-peer design is what lets value move directly between two parties without a bank in the middle, and it removes the single point of failure or control that a central server would create. This makes the network more resilient and harder to censor. “P2P” is also used for direct person-to-person trading, where buyers and sellers deal with each other rather than through an exchange’s order book.

Example

Sending crypto straight from your wallet to someone else’s, with the network relaying it, is a peer-to-peer transaction.