The origin of Skype can be traced to the file-sharing applications like Napster and KaZaa, which deployed the P2P (Peer-to-peer) technology. P2P enables the users to download the files after sharing and searching them. A decentralized P2P network offers many advantages as compared to traditional client-server networks. Moreover, second generation P2P networks are able to reduce costs of centralized infrastructure, by decentralizing resources.

Skype was established on the first P2P telephony network, which was a logical next step to P2P. VoIP software has been around for many years, but it has not been in the mainstream. It poses many problems that can be overcome with centralization, by passing the calls through firewalls or NATs. The cost of running these networks becomes equal to that of the traditional telecom systems. The high cost forces the companies running these systems, to cut down on resources per user and as such, the call quality goes down. Skype, on the other hand, has been able to use all the resources in one network. The quality of calls has been improved by producing the most user-friendly interface. The techniques used by Skype to offer the best IP-based telephony are given below.

Firewall and NAT
Two clients, who wish to communicate with each other by routing calls, can achieve it, with the help of NAT'ed nodes. The security risk is taken care of by proxies, as the calls are encrypted end-to-end. For ensuring good performance, only proxies with spare resources are used. Skype operates behind most of the firewalls, and those gateways that have no special configuration.

Decentralized Global User Directory
A centralized directory is used by most communication software, as a connection has to be established between end users, so that the static username can be associated with the variable IP number that is often the case when the user takes on a dynamic IP address. A centralized directory helps to track users, because it keeps a record of all usernames, IP numbers, and the changes, but they are very expensive. Skype is able to cut costs by decentralizing and using the resources to develop other important functions.

Effective Routing
Skype has the capability of effectively routing the encrypted calls, through the most intelligent paths with all the resources that it has at its disposal. It keeps many options of paths, and moves through the one that suits it the most. Call quality can be improved and latency can be reduced in this way.

Security
Skype encrypts all calls and instant messages, to ensure privacy. This is even more necessary, as the calls are routed through the public Internet Super-simple UI.

Skype has been designed in such a way that the software is user-friendly and easy to use. People who are familiar with Windows and telephones will find no difficulty in using Skype.

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