How P2P Networks Inspired Blockchain

Blockchain is stirring a technological revolution that could forever change how we conduct our affairs online. Many expect it to disrupt practically all industries, providing a platform that is secure enough to foster trust and confidence even without a controlling authority to oversee the system.

Security is Blockchain’s signature, which is ironic because it is built atop an architecture that was originally seen as a security nightmare.

To gain some perspective of its evolution and appreciate just what Blockchain offers us today, let’s stroll down this random access memory lane and trace how the technology developed.

In the early days (circa 1950s - 1960s), computers could do only one thing at a time. You plugged in some instructions, the computer did what you asked, and it displayed the results on-screen or in a report.

A decade later computers connected to each other on networks, and a program on one computer would issue a remote procedure call (RPC) to another program running on a different computer, which would then respond accordingly. Client-server architecture was born.

Developers realized that they needed some kind of process to make sure that communication between computers was orderly, so they created rules, which they called protocols.

One of the protocols that arose during this period was called Transmission Control Protocol/Internet Protocol (TCP/IP). Besides defining how computers communicate, it also determined how different types of networks can interact with each other. As it turns out, TCP/IP made the global Internet happen.

Client-server and the Internet made it possible for data to be located on storage facilities anywhere in the world. This paved the way for concepts such as redundancy, high availability, and distributed databases to develop.

Peer-to-peer (P2P) networks became known during the 1990s. Adopted by sites like Napster, Gnutella, Limewire, Kazaa and dozens more, P2P made many music-loving teens happy because they could share and download their digitized music files. It made many music artists and producers unhappy because millions of music-loving teens shared and downloaded their music without permission and without compensating them.

And it made many lawyers busy with all the lawsuits that flew about because of this.

In a P2P network, there is no central governing authority. All nodes within this distributed network are equal to each other. Anyone connected to the network is free to share whatever files they want to, and they are just as free to download any file shared by other users in the network. 

By its design, a P2P network is inherently insecure. It was originally intended to serve a small group of users in a private network, like a department in a small office, for example. Each user is responsible for securing his own workstation and for controlling who in the network can access it.

This level of autonomy proved to be a security nightmare for a world still working within the paradigm of a centrally controlled network. Surprisingly, this weakness would turn out to be a strength.

In 2008, a white paper prepared by an entity with the pseudonym Satoshi Nakamoto described the details of a “Peer to Peer Electronic Cash System” that eventually launched as Bitcoin. The system detailed here eliminates any trusted financial institution, such as a central bank. Instead, transactions will be recorded and validated by all nodes on a peer-to-peer network. 

“We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending. To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power.”

In the mind of Satoshi Nakamoto, the corruptible central authority was the source of the problems of the finance industry. To resolve these issues, the source had to be excised and replaced with a more secure and reliable alternative. The alternative turned out to be the antithesis of central authority, the notorious P2P network. 

Despite P2P’s reputation, Satoshi Nakamoto understood that no single controlling authority could provide what numerous autonomous nodes on a distributed network can: trustworthy validation and accountability. It is the only viable platform that can enable the system of distributed ledgers needed to complete the Blockchain puzzle.

This chain of autonomous ledgers thrives on P2P’s potentially chaotic structure and transforms what is considered its most glaring weakness into its most notable strength.