Peer-to-peer Networks: the Basis of Decentralized Projects

People's desire to create decentralized communities is always a response to the pressure or inability of centralized structures to function normally. Such associations of weaker common members are an effective and fairly stable way to counter or assert their rights — a distributed network accumulates members' resources and is able to survive.

However, the history of mankind does not remember the cases of the long existence of decentralized structures:

• in the long run, they are less effective than centralized;
• the very existence of communities based on distributed networks is a threat to organizations of a hierarchical model, which causes attempts to destroy or subjugate the former by the latter;
• under the influence of this pressure or competition, decentralized communities either disintegrate or acquire features of centralized ones.

Peer Networks

Decentralized networks are a way of self-organization in the computer age: with the same goals, identical methods and, thus, with a similar fate. In the peer-to-peer network, all participants are equal. Each computer is united in a peer-to-peer (decentralized) network and can perform the tasks of the data provider and the consumer.

P2P networks are built on top of conventional networks, such as the Internet, connecting individual devices logically, that is, using additional sets of rules. The purpose of peer-to-peer networks is to create such an association that will allow each participant to benefit from the distribution of resources, and the entire network will be resistant to the loss of its constituent nodes.

The classical architecture of computer networks provides for the mandatory presence in its composition of servers - participants of a higher rank, performing the tasks of organizing the entire structure; and customers - ordinary members who have authority only to query servers, receive responses from them, and follow the instructions.

A peer-to-peer network connects computers that can access any member of the network and respond to requests from others. The set of rules for the operation of such a structure is contained in programs (clients) that are executed simultaneously by all network members. The rules are developed taking into account possible failures of any participant. A joint audit of the actions of individual members of the network ensures its stability and resistance to threats of seizure of control.

Distributed File Sharing Networks

For mass users, peer-to-peer projects became known at the beginning of the zero years. With the development of computers and networks, the possibilities for disseminating information have emerged. However, the copyright holders and content sellers were in no hurry to use the progress made — they were satisfied with the traditional business model.

In response to this, file-sharing distributed projects began to appear: the users connected their computers to networks and freely exchanged music, films, books. Examples of such networks and projects are Napster, eDonkey2000, Kazaa, DC, BitTorrent.

It was the time of the great war between copyright holders and peer-to-peer networks. The sellers of records, CDs and paper books comfortably settled in their offline stores, and were hostile with P2P: they felt profits flowing through their fingers like sand, but did not want to change: the Internet is some kind of new toy for geeks, a no-challenger.

Lawsuits, fines, bans, arrests followed. Many projects were shut down, others moved to the “gray” zone, while others show no signs of life. However, the best and more successful direction of business development for copyright holders was still the tactics of using the capabilities of computer technology, rather than banning them. A good example is streaming services.

Peer-to-peer networks and anonymity

The progress of computers and networks has brought unprecedented opportunities for the exchange of information which is power. Centralized organizations are built on the principles of restricting access to resources: there are privileged participants who receive it in accordance with the hierarchy, and there are all the rest, the ordinary members who are content with the fact that they are allowed to have something by the privileged ones.

The conflict starts with information exchange opportunities provided by modern technologies, on the one hand, and the desire of states and corporations to limit these opportunities, on the other hand. It has become an incentive for the appearance of anonymous P2P projects and technologies, such as TOR, Freenet, l2p.

The main goal of participants in such projects is the ability to avoid the detection and identification of a particular participant using the network to provide others or receive information. To achieve this goal, sophisticated and literally confusing technologies are used: multiple encryption, concealment of traffic sources and recipients, imitation of other protocols and technologies, construction of multi-stage and non-traceable routes.

Like any other decentralized technology, this one is also under pressure from states and corporations. The reason is the same: it challenges the principles of the existence of hierarchical organizations, the source of power of which is the restriction of access to resources.

P2P in the crypto industry

The blockchain and cryptocurrency industry is a phenomenon of the modern world that demonstrates the processes of evolution of distributed organizations described above:

• it started with the desire of society for decentralization and the creation of structures that counteract hierarchical ones;
• in the mid-life it has successful promotion, gaining benefits and popularity;
• the final stage is the dissolvement or gradual acquisition of hierarchical features under constant pressure by the centralized structures.

Bitcoin is the very first, the brightest and most successful decentralized cryptocurrency project. And it has a peer-to-peer network at the heart of it, where each participant stores a complete database of all transactions on computer, and where peer-to-peer ordinary users are engaged in mining — they perform transaction verification work, which supports the existence of the whole structure.

Although, Bitcoin in its current state can hardly be called an exemplary decentralized project:

• common participants cannot access the mining and support of the network — nowadays this is done by businessmen and companies who have invested in expensive equipment;
• storage of the entire blockchain on a computer is not required, light clients can work without it;
• wallets on all kinds of centralized services are vulnerable and violate the principle of a distributed network;
• SegWit and Lightning Network are adopted, modifying the blockchain structure for the sake of convenience, speed and scalability;
• Bitcoin still has not become a full-fledged payment instrument or investment tool;
• States tighten control over points at which bitcoins can be exchanged for traditional values ​​and currencies.

All that has been said is not a rebuke to the Bitcoin community and not regret about its fate. The fate of the creation of Satoshi Nakamoto demonstrates: a good decentralized project is able to successfully compete with hierarchical projects at the start, but in order to continue its life, one has to adopt the features of the rivals. Centralization is inevitable.

The same fate awaits other crypto projects and the entire industry as a whole: such is nature, such are the laws of evolution. Centralized organizations with huge resources will ultimately either crush or subjugate the crypto industry. And then the time will come for the emergence of new, more advanced and better prepared decentralized projects.

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