Peer-to-peer, abbreviated P2P, is a collection of interconnected devices that store and share specific files and documents. Each of these devices or systems is called a node. In this structure, each node has the same power and tasks.
But the term p2p or peer-to-peer has taken on a different color and flavor in financial technologies. It is usually used to refer to the exchange of cryptocurrencies on a person-to-person and decentralized basis. A p2p crypto exchange software records the bid price of the buyer and the seller and, if they match, connects them to make the exchange. Some of the more advanced platforms have even provided a platform for automatic borrowing based on smart contracts.
Let's see where P2P was first used.
How P2P networks work:
It was stated above that a p2p system is an aggregate of interconnected systems that have the same tasks and power. There is no administrator or admin or supervisor in this system because each node keeps a copy of the file and plays two roles simultaneously. One server and one client.
So each node can download files from other nodes. While in a centralized system, client devices download information from a centralized server.
In P2P networks, networked devices share files stored on their drives. Using software designed to mediate data sharing, users can search for other devices on the web, find and download files. Once the user downloads the file, it can act as the source of that file.
Simply put, a node acts as a client when downloading from other sources, but when it acts as a server, it is a resource from which other nodes can download files. (This can happen at the same time.)
P2P history:
For the first time in the '80s, after introducing computers, one of the first examples of a user network was Internet Relay Chat, which was a way to send text and chat between two people.
In 1999, Napster introduced a P2P network for music sharing. This service made it possible for anyone to share their favorite music with others.
In 2000, a project called Gnutella started decentralized peer-to-peer sharing, which is still ongoing. Gnutella allows users to access folders on other systems.
Finally, it was in 2009 that Satoshi Nakamoto introduced the Bitcoin network as a peer-to-peer network. Perhaps the most famous sentence in the world about P2P is the first sentence of Bitcoin White Paper:
Bitcoin: A Peer-to-Peer Electronic Cash System
Most people have never heard of P2P before Bitcoin.
Advantages of P2P networks:
Elimination of intermediaries: From the point of view of some economic actors, probably the most essential advantage of P2P is the elimination of intermediaries such as banks or financial and credit institutions.
In this way, digital currency is transferred directly from one person's wallet to another, and no bank in the middle plays the role of intermediary.High security: Many others believe that much more security of this system than centralized client-server systems is the most significant advantage of p2p. It is P2P that protects digital currencies such as bitcoin against Dos attacks. Dos is a type of cyber attack that takes the server off the network and out of the reach of users. However, since peer-to-peer information systems are divided among many nodes, they are resistant to these attacks.
Avoid censorship: Avoiding censorship is another benefit of peer-to-peer networks. Because no one has the permission and power to block users' accounts, some people, such as merchants, see cryptocurrencies as a surefire way to prevent government payments from being blocked.
Disadvantages of P2P networks:
Scalability: Because distributed offices must be updated at each node instead of the central server, adding any transaction in the blockchain requires a great deal of computing power. While this increases security, it dramatically reduces efficiency and is one of the main obstacles to scalability and widespread acceptance. However, blockchain encoders and developers are exploring options that may be used as scalability solutions. Prominent examples are the Lightning network, the atrium plasma, and the Wembley protocol.
Hard fork attacks: Another potential limitation is related to seizures during a hard fork. Because most blockchains are decentralized and open-source, nodes can freely copy and modify the code, detach from the main chain, and form a new parallel network. A hard fork is perfectly normal and is not a threat in itself. But if security measures are not taken properly, both chains will be vulnerable to replay attacks.
In addition, the distributed nature of P2P networks makes it difficult to control and regulate them. For example, several P2P programs and companies have engaged in illegal activities and copyright infringement.
Unstructured P2P networks
In unstructured P2P networks, there is no specific organization of nodes. In this network, participants communicate with each other randomly. These systems are resistant to high churn activity (i.e., multiple nodes frequently joining and exiting the web).
Although this type of network is easier to build, unstructured P2P grids may require more CPU and memory because search queries are sent to as many people as possible or so-called peers. These requests will fill the network, especially if a small number of nodes provide the desired content.
Structured P2P networks
Structured P2P networks have an organized architecture. This architecture allows nodes to search for files effectively, even if the content is not widely available. In most cases, this is done using hash functions that facilitate database search.
While structured networks may be more efficient, they are usually more centralized and require higher operating and maintenance costs. Of course, structured networks have less resistance when faced with high churn activity.
Hybrid or hybrid P2P networks
P2P hybrid networks combine the typical client-server (client-server) model with some aspects of one-to-one architecture. For example, a central server may be designed to facilitate communication between peers or individuals.
This network has a better overall performance compared to the other P2P networks mentioned. Usually, some of the main advantages of each approach are combined with the other, and finally, a considerable degree of efficiency and decentralization is achieved.
top 5 p2p cryptocurrency exchange platforms:
Paxful:
One of the world's leading peer-to-peer exchange currency brands, founded in 2015, is Paxful, which has many fans worldwide.
Paxful has made various payment methods available to its users; methods such as Bank Transfer, CashU, Paypal, Western Union.
The cost that Paxful charges for exchanges are equal to 1% of the total, which is the seller's responsibility. In other words, buying a cryptocurrency in Paxful will not cost you extra.
Localbitcoins:
The Finnish company, headquartered in Helsinki, started in 2012. One of the honors of this company is it's most popular in 2017.
The interesting point is that when buying a Cryptocurrency from LocalBitcoins site and the usual methods that Paxful also offers, you can give money to the other party in cash and buy a Cryptocurrency. (Of course, this feature was removed in 2019.)
The cost of Bitcoin trading commission on the LocalBitcoins site is zero.
It should be noted that this website has been hacked once, and it does not make sense to keep your bitcoins in its wallet. Be sure to transfer the bitcoins to your wallet.
Binance P2P:
Probably the most well-known platform for currency exchange is Binance Exchange. The company was founded in 2017 by Changpen Zhao and is currently the most prominent digital currency exchange globally.
The large company's service to most countries globally and support for more than 31 different Fiat currencies has multiplied its popularity.
Binance also supports tether, Bitcoin, Binance USD, BNB, Ethereum, and many more cryptocurrencies.
WazirX:
A few months after the establishment of Binance, the WazirX P2P platform was launched in India and soon became the most trusted peer-to-peer password exchange script.
The main reason for the popularity of this software was that for the first time in the world, it used an automatic p2p matching engine. So instead of choosing the buyer or seller manually, the system does this automatically.
Surprisingly, the exchange cost in WazirX is zero. Isn't that great?
Remitano:
Remitano was founded in Singapore in the year of its establishment, and with the reputation, it has gained over the years, it has reassured many crypto exchanges.
Remitano's fantastic user interface has had an enormous impact on this much-welcomed platform.
As for the negative points of Remitano, let's say that you have to give one percent of the total amount to the exchange when exchanging the password. You also have to pay a fee when you want to settle the account.
Now, why is it still so popular with all the money it takes from its customers?
That's a good question. Because Remitano has an outstanding level of security and its service is excellent.
p2p crypto exchange website development:
The cost of developing and designing p2p software for exchanging bitcoins and other cryptocurrencies depends on many factors.
First, you need to fully determine what features you want to offer your customers and design a complete mind map for it and then put it on paper and discuss with your consultants whether they are efficient or not. Features like:
• Stop limit
• Margin order
• OCO
• Future order
• OTC order
• And much more
Each of these features can have a significant impact on your cost.
For example, adding a stop limit will increase your cost by 25% of the initial price, while 25 working days will be added to the time. Or, a margin order adds up to 40% to your initial cost and takes up to 35 days. The figure below shows the approximate price increase of other factors affecting the P2P price.
In addition to features, other factors can affect the price, such as:
• Programming languages and technologies used
• The company you order from
• Mobile application
• Multilingualism
• Crypto payment gateways
In this article, we tried to provide all the points related to the currency exchange platform development. We hope you find it helpful.
Top comments (1)
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