Peer-to-peer technology plays a crucial role in digital currencies by enabling direct transactions between users without the need for a central authority. In systems like Bitcoin, peers connect through a decentralized network, allowing for the exchange of value and information. This approach enhances security and transparency, as transactions are recorded on a public ledger known as a blockchain. Additionally, it empowers users with greater control over their funds and fosters an inclusive digital economy by reducing reliance on traditional financial institutions.