What is a P2P Server and How Does it Work?

Peer-to-peer (P2P) networking enables computers to communicate directly with one another without using a traditional server or an intermediary. A P2P network is typically used to distribute music, videos, and other types of content, but can also be used to transfer applications, games, and more.

As the number of content-sharing applications, such as TikTok, grew exponentially, the need for a P2P network to support these apps became apparent. This is where BitTorrent and eDonkey naturally fit in as both of those apps use a P2P network to function. When users install these apps, they will typically find that they come with a built-in P2P server that allows them to connect with other users, share content, and interact with the application.

However, a P2P network is not just limited to applications that operate directly on a P2P network. One of the biggest advantages of a P2P network is that it allows for applications that run directly on a user’s computer without the need for an internet connection, which ensures that files can be shared even when users are offline. This feature makes P2P networks extremely useful when it comes to creating applications and services that work completely independently of an internet connection.

A P2P server allows for computers to communicate with one another and operate as a traditional server without the need for users to directly connect with one another. In other words, a P2P server enables computers to act as an intermediary to provide services to other computers. For example, Google Drive and eFolder are both cloud-based P2P servers that provide file storage and synchronization capabilities that work directly with other users’ files, eliminating the need for an internet connection to transfer data. In this case, the file storage and synchronization features of these applications make them perfect for individuals who want to create a repository for archiving files, such as business papers and project documentation. These applications also provide advanced features that allow users to search for files, sort them according to multiple criteria, and filter the results based on the information contained within the files. In addition, Google Drive and eFolder provide users with an additional layer of security when it comes to sharing files with others since all communication to and from other computers happens over a secured connection.

Since the need for a P2P network grew, so did the number of available solutions. Today, there are hundreds of different applications, including games, that allow users to engage in P2P networking. The advantage of such a diverse array of applications is that there is something out there to suit everyone’s needs. In other words, regardless of whether you are a gamer who wants to connect with other gamers for online matches or someone who wants to use an app to organize and share photos with friends and family, there is an ideal solution for you.

What is Ethereum?

When it comes to distributed ledger technology and cryptocurrencies, most people think of Bitcoin. Introduced in 2009, Bitcoin is one of the most popular cryptocurrencies and is often described as the ‘gold standard’ for cryptocurrencies due to its limited supply and high value. Bitcoin is also popular because it provides individuals with a way to participate in the crypto market without truly owning any cryptocurrency themselves. This way of thinking is changing as more people are realizing the many advantages that Ethereum offers compared to Bitcoin. We will discuss some of the key differences between the two cryptocurrencies in the following paragraphs.

Ethereum Vs. Bitcoin: Major Differences

Despite being one of the more modern cryptocurrencies, Ethereum was actually the very first distributed ledger app built on the blockchain technology invented by Satoshi Nakamoto. The fact that it came first makes it the flagship cryptocurrency of the entire ecosystem. Ethereum was designed to be flexible and scalable enough to enable a wide variety of use cases while not sacrificing the core features that made it so useful in the first place. In other words, since it was built with multiple use cases in mind, Ethereum is able to deliver on a lot of the promises made by its creators. This level of versatility is why most cryptocurrencies and blockchain experts consider it to be the ‘Gold Standard’ for cryptocurrencies. It really is the ‘Gold Standard’ because of its efficient use of resources and advanced features.

One of the most significant differences between the two cryptocurrencies is the way they store and process information. As we mentioned above, Bitcoin is a decentralized cryptocurrency while Ethereum operates using a conventional centralized system. This difference is best illustrated by comparing the two cryptocurrencies’ blockchains. The blockchain of Bitcoin is stored across a network of computers, called the blockchain, that verify and authenticate transactions and stored data. This decentralized approach has a lot of advantages, including a much higher level of security. In addition, since the blockchain is open to the public, anyone can access and verify transaction activity, limiting the possibility of data tampering. The downside to this is that the blockchain is extremely bulky and requires a lot of computing power to verify and process all the transactions. To give you an idea of how much computing power is needed, the entire blockchain for Bitcoin only consumes about 0.5% of the global energy consumption as of November 2019.

In contrast, within the Ethereum ecosystem, almost all information is stored on a single giant server, or ‘Genesis Block,’ which serves as the authoritative source for the entire blockchain. In other words, the entire Ethereum blockchain can be viewed as a single huge ledger that is constantly and securely synchronized with the data stored on the server. This system has some significant advantages. First, since all the information is stored on one central server, any potential issues with the blockchain can be pinpointed and fixed more easily since all the data is available to be downloaded and examined by anyone. Second, since the Ethereum blockchain is constantly updated and synchronized with the latest data from the server, it is always up-to-date, eliminating the possibility of outdated transactions. Third, mining a cryptocurrency is a resource-intensive process, and since the Ethereum blockchain is constantly updated, it requires less computing power to maintain its integrity than many of the other blockchains out there. This makes it much easier for individuals, businesses, and even organizations to consume resources to maintain their wallets and run a full node (a basic process that keeps your cryptocurrency secure and stable).

One of the biggest criticisms that can be leveled at Bitcoin is that it is not decentralized. While it was designed to be a ‘decentralized’ currency, this quality is somewhat dependent on the number of people willing to volunteer their computing power to maintain the decentralized network. For instance, with all the mining occurring through computer hardware and energy-intensive processes used to process transactions, it is not difficult to see how a small number of centralized entities could gain control of Bitcoin. In theory, this is what happened in early 2018 when the price of Bitcoin fell dramatically after a group of attackers managed to take over about 10% of all the Bitcoin in existence at that time. This is why the consensus in the crypto community is that if you want to be sure your money is safe, you should avoid using Bitcoin and move toward more decentralized cryptocurrencies, such as Ethereum and XRP, which are both safer and more stable than Bitcoin. This kind of event serves as a stark reminder that while decentralization has many advantages, it also has a dark side.

Additional Differences Between Bitcoin and Ethereum

Besides having a different data storage and processing mechanism, Bitcoin and Ethereum also have some distinct differences when it comes to their interfaces and the way they are used. These differences can be seen in the form of different coin wallets, block explorers, and how transactions are verified and executed. We will discuss each of these points in turn.

Coin Wallets

When it comes to storing your cryptocurrency, you have two main options: you can either use a hardware wallet, such as the popular Ledger Wallet, or you can use a desktop wallet. A hardware wallet is a completely offline wallet that maintains a secret key that is used to access your cryptocurrency. Since no one has access to these keys but you, the risk of losing your keys is minimal. If you do lose your keys, however, you will lose your cryptocurrency. The downside to using a hardware wallet is that you have to trust the device itself to keep your keys secure, which some people find difficult. For this reason, hardware wallets are not commonly used by individuals, but rather by business entities and larger cryptocurrency holdings.