What is a peer to peer network?
A peer to peer network is a system or network, where files or some form of data is shared directly between the two computers without the need of a third party to do it.
Why is it important?
If you think about it, all of our internet and data transfer is usually done with a third party, even when we think it isn’t. When we send money from one person to another, they actually still need to interact with a third party (their bank) to process it. In this way, trust becomes a big factor in how we interact. Not only that, but it means that we are limited in who we can send our funds to. The other party needs to also be set up with a correspondent bank or system.
Where things can seem Peer-to-peer but they aren’t.
The same can be true of emails in some way – iCloud, for instance, facilitates the email service itself. Getting away from this would be harder at present due to the technological requirements and logistics needed for people to be able to run their own servers and setup receiver/sender mail functions on their local machine.
Importance of advancing payment networks.
Where a peer-to-peer network for funds comes into play is in international money transfers. The ability to be able to send money quickly, efficiently and directly would lower a huge barrier to entry for services and products between smaller businesses. Not only that, but family members who are overseas and still want to support their loved ones’ back home would be better placed to move their funds back and forth as needed.
The top ones that come to mind for peer to peer payments in the blockchain industry are Circle Pay, Ripple (XRP), and Stellar (XLM). Now that the tech is booming, many smaller companies are coming to the realisation that this is a very lucrative service to offer. The way in which these networks transact is equally important however.
Fiat & Cryptocurrency.
Transferring cryptocurrencies between wallets is a very fast and low-cost experience. The issue is transferring fiat. Or having to exchange crypto-to-fiat. In most countries, the ability to spend cryptocurrency is incredibly limited. In this sense, those targeting markets that are able to process and handle efficient conversions will see a faster growth than those targeting only one or the other. For the likes of Ripple and their XRP token, the transaction speeds are high and they offer a bridge-currency option via XRP. This is broadly aimed at large-scale transactions between countries and businesses.
Frictionless payment future.
When the boundary lines between countries and currencies begin to come down, new doorways open up. The ultimate peer-to-peer network would allow the unbanked access to digital wallets on their smart accessories, and allow them to transact seamlessly with clients and people around the world. Whether it’s their family or a new business venture, the internet should be able to supply everyone with liquid funds 24/7.