A peer-to-peer (P2P) service is a decentralized platform whereby two individuals interact directly with each other, without intermediation by a third party. Instead, the buyer and the seller transact directly with each other via the P2P service. The P2P platform may provide services such as search, screening, rating, payment processing, or escrow.
Key Takeaways
A peer-to-peer service is a platform that directly connects parties in a transaction without a third-party intermediary.
Peer-to-peer services leverage technology to overcome the transaction costs of trust, enforcement, and information asymmetries that have been traditionally addressed by using trusted third parties.
Peer-to-peer platforms offer services such as payment processing, information about buyers and sellers, and quality assurance to their users.
The modern peer-to-peer concept was popularized by file-sharing systems, such as the music-sharing application Napster, which appeared in 1999. The P2P movement allowed millions of internet users to directly connect, form groups, and collaborate with each other to function as user-created search engines, virtual supercomputers, and file systems. This model of network arrangement differs from the client-server model, where communication is usually to and from a central server.
Today P2P services have moved beyond purely internet services, though they are mostly thought of as at least internet-based. Peer-to-peer services involve activities that range from simple buying and selling to those that are considered part of the sharing economy. Some peer-to-peer services don't even involve a paid transaction by the users at all, but they bring together individuals to work on joint projects, share information, or communicate without direct intermediation. These kinds of P2P services may be operated as free nonprofit services or generate revenue by advertising to users or by selling user's data.
When a third party is removed from the transaction, there is a greater risk that the provider of the service may fail to deliver, that the service 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 information. This extra risk constitutes added transaction costs to a P2P transaction. Often, P2P services are created with the intent of facilitating these transactions and reducing risk for both buyer and seller. The buyer, seller, or both might pay the cost of the service 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 view and/or modify code for the software. Open-source software tries to eliminate the central publisher/editor of software by crowdsourcing the coding, editing, and quality control of software among writers and users.
Filesharing is where uploaders and downloaders meet to swap media and software files. In addition to peer-to-peer networking, filesharing services can provide scanning and security for shared files. They may also offer 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 private sellers of goods to find interested buyers. Online market places can offer promotion services for sellers, ratings of buyers 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 users can make payments, process, and verify payments without a central currency issuer or clearinghouse. Blockchain technology allows people to transact business using cryptocurrencies and to make and enforce smart contracts.
Homesharing
Homesharing allows property owners to lease all or part of their property to short-term renters. Homesharing services typically provide payment processing, quality assurance, or rating and qualification of owners and renters.
Ridesharing
Ridesharing is a platform for car owners to offer chauffeur service for people seeking a taxi ride. Ridesharing platforms offer similar services as homesharing services.
What Are P2P Payment Services?
P2P payment services help facilitate the transfer of funds between people. Examples of P2P payment service providers include Venmo, CashApp, Zelle, and PayPal, among many others.
What Are Drawbacks of P2P?
One major disadvantage of P2P services is a lack of third-party vetting engaged parties. This introduces a level of risk and information asymmetry. On filesharing sites, media available for download may be corrupted. On homesharing platforms, there can be discrepancies between the expectations of property owners and lessees, leading to disagreements that are difficult to mediate in the absense of a third-party. On P2P payment platforms, it can be difficult to retrieve erroneous payments, as there is no mediator involved in overseeing a transaction.
Why Are P2P Services Popular?
P2P services have become incredibly popular over the past decade. This is in part due to the convenience they offer. People may transfer money to each other in seconds through Venmo, hire rides through Uber or Lyft in minutes, and book apartments through AirBnb across the world, seemingly with ease. On the flip side, P2P services can also introduce risks to one or both parties due to asymmetries in information.
The Bottom Line
Peer-to-peer services (P2P) are platforms where two parties may connect directly to engage in a transaction. On P2P platforms, technology plays a role in matching buyers and sellers, where a third-party intermediary may have previously played a role. Example of P2P services are prevalent in many fields, from payment processing to filesharing to online shopping. They can offer ease to users, though P2P services are not without their risks, as well.
In a peer-to-peer (P2P) network, each computer acts as both a server and a client—supplying and receiving files—with bandwidth and processing distributed among all members of the network. Such a decentralized network uses resources more efficiently than a traditional network and is less vulnerable to systemic failure.
P2P networks are commonly used for file sharing. One well-known example is BitTorrent, where users can download and upload files directly from and to other users. Instead of relying on a central server to distribute files, each user contributes to the network's bandwidth by downloading and uploading simultaneously.
P2P payment services help facilitate the transfer of funds between people. Examples of P2P payment service providers include Venmo, CashApp, Zelle, and PayPal, among many others.
A peer-to-peer network is decentralised, self-organising, highly scalable and each node has equal privileges and responsibilities. A peer-to-peer (P2P) network is a type of decentralised network architecture where each node, or 'peer', has the same capabilities and responsibilities.
Examples of mainstream P2P software programs include BitTorrent, Limewire, Ares and AresWarez, Kazaa, Azureus, DC++ and Morpheus. I clicked on the “I Will Comply” button but my internet access was never restored. How do I get this fixed?
The main advantages of P2P include reducing the load and cost of servers, increasing the availability and reliability of resources, and enhancing the privacy and anonymity of nodes. However, P2P can also be difficult to manage and secure due to varying capabilities, configurations, and trust levels among nodes.
The main advantage of peer to peer network is that it is easier to set up. In peer-to-peer networks all nodes are act as server as well as client therefore no need of dedicated server. The peer to peer network is less expensive.
P2P networks originated in the 1980s, gained popularity through Napster, help in file sharing without a central server, three types are structured, unstructured, and hybrid, offer advantages like cost-effectiveness, privacy, and scalability, drawbacks include management challenges, need for computational power, and ...
In a peer-to-peer network, computers on the network are equal, with each workstation providing access to resources and data. This is a simple type of network where computers are able to communicate with one another and share what is on or attached to their computer with other users.
Peer-to-peer payments (sometimes referred to as person-to-person payments) are digital payments between two individuals, a type of mobile banking. The funds are transferred directly from one person's bank account, checking account, credit or debit card, or payment app, to another person's bank account, or app.
In peer-to-peer (P2P) networking, a group of computers are linked together with equal permissions and responsibilities for processing data. Unlike traditional client-server networking, no devices in a P2P network are designated solely to serve or to receive data.
Peer-to-peer (P2P) is a decentralized communications model in which each party has the same capabilities and either party can initiate a communication session.
Ensure that a hub, router, or wireless access point and adequate cables are available. Create local logins on their workstation for each team member. Share their SmartSync copy with the other team members.
P2P is used in many protocols such as BitTorrent file sharing over the Internet and in personal networks like Miracast displaying and Bluetooth radio. The concept has inspired new structures and philosophies in many areas of human interaction.
P2P systems facilitate money transfers between people typically through a website or mobile app. Popular digital apps, such as PayPal, Venmo and Zelle for example, aim to make the life of users easier by allowing them to send or receive money to and from another person's bank account without an intermediator.
It's an educational approach emphasizing collaboration and knowledge sharing among individuals within a group or community. Collaboration: Peer-to-peer learning fosters collaboration among participants. Learners work together to solve problems, share information, and achieve common learning objectives.
P2P implementation relies on centralized data to establish a connection to other computers, without the use of a central server for the connection. Example: BitTorrent is an example of a P2P relationship.
P2P systems facilitate money transfers between people typically through a website or mobile app. Popular digital apps, such as PayPal, Venmo and Zelle for example, aim to make the life of users easier by allowing them to send or receive money to and from another person's bank account without an intermediator.
BearShare, LimeWire, KaZaa, eMule, Vuze, uTorrent and BitTorrent are examples of P2P file shar- ing programs. When P2P file sharing software is not configured properly, files not intended for sharing may be accessible to anyone on the P2P network.
Famous examples include Airbnb, Turo, and Vrbo. These platforms help consumers find each other, trust one another, and make secure payments. Opportunities for these kinds of marketplaces are everywhere. For example, Sharetribe customers have built sites for swimming pools, cars, sporting equipment, and much more.
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