In this paper, we investigate Reputation Systems for P2P networks more ambitious approach to protect the P2P network without using any central component, and thereby harnessing the full benefits of the P2P network. The reputations of the peers are used to determine whether a peer is a malicious peer or a good peer. Once detected, the malicious peers are ostracized from the network as the good peers do not perform any transactions with the malicious peers. Expulsion of malicious peers from the network significantly reduces the volume of malicious activities. All peers in the P2P network are identified by identity certificates. The reputation of a given peer is attached to its identity. The identity certificates are generated using self-certification, and all peers maintain their own certificate authority which issues the identity certificates to the peer. Each peer owns the reputation information pertaining to all its past transactions with other peers in the network, and stores it locally. A two-party cryptographic protocol not only protects the reputation information from its owner, but also facilitates secure exchange of reputation information between the two peers participating in a transaction.