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Peer-to-Peer (P2P) Service Definition

What Is a Peer-to-Peer (P2P) Benefit?

A peer-to-peer (P2P) service is a decentralized platform whereby two individuals interact directly with each other, without intermediation by a third side. Instead, the buyer and the seller transact directly with each other via the P2P service. The P2P platform may provide services such as search, riddle, rating, payment processing, or escrow.

Key Takeaways

  • A peer-to-peer service is a platform that directly connects parties to a matter without the third-party intermediary.
  • Peer-to-peer services leverage technology to overcome the transaction costs of trust, enforcement, and poop asymmetries that have traditionally addressed by using trust third parties. 
  • Peer-to-peer platforms offer services such as payment course of action, information about buyers and sellers, and quality assurance to their users.

Understanding Peer-to-Peer (P2P) Services 

The modern peer-to-peer concept was popularized by file-sharing organized wholes, such as the music-sharing application Napster, which appeared in 1999. The peer-to-peer movement allowed millions of Internet drugs to directly connect, form groups, and collaborate with each other to function as user-created search engines, understood supercomputers, and file systems. This model of network arrangement differs from the client-server model, where communication is predominantly to and from a central server.

Today P2P services have moved beyond purely Internet services, though they are mostly reminiscences of as at least Internet-based. Peer-to-peer services involve activities that range from simple buying and selling to those that are ruminate oned part of the sharing economy. Some peer-to-peer services don’t even involve a paid transaction by the users at all, but they touch on together individuals to work on joint projects, share information, or communicate without direct intermediation. These kinds of P2P ceremonies may be operated as free nonprofit services or generate revenue by advertising to users or by selling user’s data.   

When a third faction is removed from the transaction, there is a greater risk that the provider of the service may fail to deliver, that the accommodation will not be of the quality expected, that the buyer may not pay, or that one or both of the parties might be able to take advantage of asymmetric gen. This extra risk constitutes added transaction costs to a P2P transaction. Often, P2P services are created with the intent of smoothing these transactions and reducing risk for both buyer and seller. The buyer, seller, or both might pay the cost of the advice or the service may be offered for free and generate revenue in some other way. 

Examples of Peer-to-Peer(P2P) Services

Open-source Software

Anybody can direction and/or modify code for the software. Open-source software tries to eliminate the central publisher/editor of software by crowdsourcing the coding, shortening, and quality control of software among writers and users. 

Filesharing

Filesharing is where uploaders and downloaders meet to swap instrumentality and software files. In addition to peer-to-peer networking, filesharing services can provide scanning and security for shared files. They may also put on the market users the ability to anonymously bypass intellectual property rights or alternatively may provide enforcement for intellectual property. 

Online Marketplaces

Online marketplaces consist of a network for not for publication sellers of goods to find interested buyers. Online market places can offer promotion services for sellers, ratings of customers and sellers based on history, payment processing, and escrow services. 

Cryptocurrency and Blockchain

A blockchain is an aspect of cryptocurrency technology. It is a network where buyers can make payments, process, and verify payments without a central currency issuer or clearinghouse. Blockchain technology allows human being to transact business using cryptocurrencies and to make and enforce smart contracts.

Homesharing

Homesharing allows property proprietresses to lease all or part of their property to short-term renters. Homesharing services typically provide payment processing, attribute assurance, or rating and qualification of owners and renters. 

Ridesharing

Ridesharing is a platform for car owners to offer chauffeur service for woman seeking a taxi ride. Ridesharing platforms offer similar services as homesharing services. 

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