Peer-to-peer file sharing (also known as P2P) is an alternative to a client server network design in that users connect through a common software/provider in order to download files. Although uploading is often encouraged, it is not required to share files; rather the files are stored and shared among the users.
There are four types of P2P file sharing possible, each with their own advantages and limitations.
First P2P generation
Second P2P generation
Third P2P generation
Fourth P2P generation
File sharing is notorious for being accompanied by viruses, spyware and adware. This malware can remain on the system even if the original file is deleted, and can be difficult to eliminate. Malware often interferes with the way web browsers operate and can disable anti-virus software, anti-spyware, and firewalls.
If you are not using the proper settings you could allow access to other information stored on your hard drive instead of limiting access to the files you intended to share. This means global access to information like your tax returns, email messages, medical records, pictures and other personal documents.
Although file sharing is intended for the sharing of legitimate documents, it is often used by individuals to share copyrighted materials without permission. When you download something in breach of copyright law, you are breaking the law.
To prevent malware it is important to run spyware removal programs as well as make sure your anti-virus is up to date. For more information visit the security page on Anti-Spyware and Anti-Virus web page.
Avoid using first and second generation P2P as these networks are more prone to malware and other personal risks. Although the later generations help to deal with these problems it is important to use caution as all file sharing leaves the user open to some degree of risk.
For more information, see Microsoft's tips on peer-to-peer file sharing.