Block Chain - Peer-to-Peer (P2P)

 Transactions are direct digital transfers between two participants on a network without intermediaries such as banks or payment processors.

Core Explanation (Exam-Focused)

  1. Direct Interaction
    Sender and receiver transact directly over the network.

  2. No Central Authority
    Eliminates reliance on banks, clearing houses, or third parties.

  3. Blockchain Verification
    Transactions are validated by network nodes using consensus mechanisms.

  4. Cryptographic Security
    Digital signatures ensure authenticity and prevent tampering.

  5. Lower Cost
    Reduced or no intermediary fees.

  6. Global and Borderless
    Works across countries without currency conversion barriers.

  7. Transparency
    Transaction details are recorded on a public ledger.

  8. Irreversibility
    Once confirmed, transactions cannot be reversed.

Transaction Flow

  1. Sender creates and signs transaction with private key

  2. Transaction is broadcast to the network

  3. Nodes validate the transaction

  4. Transaction is added to a block and confirmed

Example

  • Sending Bitcoin directly from one wallet to another without using a bank.

One-Line Definition (Exam Use)

Peer-to-peer transactions are direct transfers of digital assets between users on a decentralized network without intermediaries.