Point-to-Point (PPP)

What is PPP?
Point-to-Point connection is one of the most common types of WAN connection. PPP connections are used to connect LANs to service provider WANs, and to connect LAN segments within an organisation network. A LAN-to-WAN point-to-point connection is also referred to as a serial connection or leased-line connection, because the lines are leased from a carrier (usually a telephone company) and are dedicated for use by the company leasing the lines.
Simply, when you establish a connection to your ISP (Internet Service Provider) through a modem. The connection between the ISP and you make up two points on the network. Therefore, the protocol that is used for establishing this connectivity between the two of you is the Point-to-Point Protocol or the PPP.
Note: The default serial encapsulation method when you connect two Cisco routers is HDLC. This means, Cisco HDLC can only work with other Cisco devices. However, when you need to connect to a non-Cisco router, you should use PPP encapsulation. This is one of many advantages to using PPP it is not proprietary.
PPP can be used over twisted pair, fibre-optic lines, and satellite transmission. PPP provides transport over ATM, Frame Relay, ISDN and optical links. For security, PPP allows you to authenticate or secure connections using either Password Authentication Protocol (PAP) or the more effective Challenge Handshake Authentication Protocol (CHAP).
PPP is used to carry out the following functions

• Data Encapsulations: this is a method used to encapsulate multi-protocol datagrams. Different network-layer protocols are simultaneously transported and encapsulated over the same link, the flexibility of the PPP design enables it to be compatible to most supporting network devices.
• Link Control Protocol: The LCP is used to establish, configure, and test the data link connection. It’s flexible in handling different sizes of packets, detect a looped-back link, configuration errors, and terminate the link.
• Network Control Protocol: NCP is used for establishing and configuring different Network layer protocols. PPP enables the simultaneous use of multiple Network layer protocols.  Some of the more familiar NCPs are:

i.        Internet Protocol Control Protocol
ii.       AppleTalk Control Protocol
iii.     Novell IPX Control Protocol
iv.     Cisco Systems Control Protocol
v.      SNA Control Protocol
vi.     Compression Control Protocol.

PPP Configuration Options

How to Configure PPP on Cisco router

How to Configure PPP with Authentication (PAP and CHAP)