Bittorrent (Torrents)
This is currently the most popular P2P protocol, below is some basic information regarding how it works.
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BitTorrent is a peer-to-peer file sharing (P2P) communications protocol. BitTorrent is a method of distributing large amounts of data widely without the original distributor incurring the entire costs of hardware, hosting and bandwidth resources. Instead, when data is distributed using the BitTorrent protocol, each recipient supplies pieces of the data to newer recipients, reducing the cost and burden on any given individual source, providing redundancy against system problems, and reducing dependence on the original distributor.
The protocol is the brainchild of programmer Bram Cohen, who designed it in April 2001 and released a first implementation on 2 July 2001. It is now maintained by Cohen's company BitTorrent, Inc.
Usage of the protocol accounts for significant traffic on the Internet, but the precise amount has proven difficult to measure.
There are numerous compatible BitTorrent clients, written in a variety of programming languages, and running on a variety of computing platforms.
How It Works:
A BitTorrent client is any program that implements the BitTorrent protocol. Each client is capable of preparing, requesting, and transmitting any type of computer file over a network, using the protocol. A peer is any computer running an instance of a client.
To share a file or group of files, a peer first creates a "torrent". This small file contains metadata about the files to be shared and about the tracker, the computer that coordinates the file distribution. Peers that want to download the file first obtain a torrent file for it, and connect to the specified tracker, which tells them from which other peers to download the pieces of the file.

In this animation, the coloured bars beneath all of the clients represent individual pieces of the file. After the initial pieces transfer from the seed, the pieces are individually transferred from client to client. The original seeder only needs to send out one copy of the file for all the clients to receive a copy.