Peer-to-Peer Networks

Crypto Glossary

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Peer-to-Peer Networks

Peer-to-Peer Networks (P2P) networks allow people to connect with each other directly for sharing things – without going through a middleman.

For cryptocurrencies, this means users can send funds straight to each other’s digital wallets. So if Jen wants to pay Alan some Bitcoin, she can just send it to him directly through the P2P network.

All the members of the P2P network (called peers) have a copy of the records showing who owns what crypto. When Jen sends Bitcoin to Alan, all the peers verify she has enough funds to complete the transaction.

Once verified, the transaction gets added to the public ledger (called the blockchain). This all happens without needing a bank or central company in charge.

The peers power the whole network by verifying and recording every transaction.

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