Bitcoin delivers its promise as a decentralised alternative for fiat currency through active participation from its community. This participation generally comes in the form of users, miners, and nodes. In this article, we learn what a Bitcoin node is, the various types of nodes, the advantages of running a node, and ultimately, how you too can run a bitcoin node and be part of/contribute to the BTC network.
What is a Bitcoin Node?
The Bitcoin blockchain is a decentralised ledger that is duplicated and independently maintained on hundreds of thousands of computers across the world. Each of these computers has its own copy of the entire blockchain and is tasked to verify transactions and update itself. These computers are known as nodes.
In simpler terms, a Bitcoin node is a computer with its own duplicated copy of the entire BTC blockchain that it continuously verifies and updates. The presence of nodes is primary to the functioning and security of the BTC blockchain.
As someone running a node, you become one of the millions who ensure that no flawed, unverified, or false data enters the blockchain.
Types of Bitcoin Nodes
There are two primary types of Bitcoin nodes — full nodes and light nodes (or lightweight nodes). The third type of node is an enhanced version of a full node known as a mining node. Let’s learn what each type of node means and how it works:
Full Nodes
According to Bitcoin Core documentation, “a full node is a program that fully validates transactions and blocks. Almost all full nodes also support the network by accepting transactions and blocks from other full nodes, validating those transactions and blocks, and then relaying them to further full nodes.” As a result, running a full node requires plenty of storage space as well as download and upload capacities.
Light Nodes
Light nodes, on the other hand, depend on full nodes for their functioning. They do not store the entire blockchain but instead verify transactions through simplified payment verification (SPV).
They neither need the high storage, as they don’t store the entire ledger, nor do they require the high download/upload speeds that are needed to manage full nodes. Light nodes are an addition that improves the decentralised nature of BTC, ensuring that more participants can join the network even without the excessive hardware requirements.
Mining Nodes
Full nodes on the BTC network can also be used to mine Bitcoin once they’re equipped with sufficient computing and processing capabilities.
In addition to hosting the entire blockchain, mining nodes also solve complex cryptographic puzzles to add new blocks and earn newly minted BTC. Each miner in the network competes to be the first node to create a new block and to prove that it has performed the work. Once this is done, the miner is rewarded with a certain number of Bitcoins.
Now that we have learned the various types of nodes - let’s answer the bigger question of why should anyone run their own node?
Advantages of Running a Bitcoin Node:
A way to truly understand how Bitcoin works
Bitcoin is complex enough for a commoner to never fully understand. When you run a node, it opens doors for a greater understanding of how the Bitcoin network operates and how every small piece of the puzzle contributes to the bigger picture.
From the hardware that is needed to its functioning to the set up of the node, it is a practical learning process that is incomparable to just reading or learning about it indirectly.
Support the Network
When you run a Bitcoin node, you contribute to making the BTC network stronger and more impenetrable than it already is. The more the number of nodes on the network, the greater its security gets. It means that there are more nodes keeping track of the transactions and the distributed nature of the bitcoin ledger gets enhanced.
Privacy
Any form of an operation (transactions, blockchain exploration, verification, etc.) that you conduct on the Bitcoin network, you are connecting with a node. When the node isn’t your own, you depend on a node run by someone else to help with your operation.
This indirect link to a node means that you are trusting your internet service provider or other parties to not save your IP information associated with that operation. There are measures to ensure that this does not happen but the only way you can be sure is by running your own node.
By running your own node, you know that no data of yours is getting traced or saved anywhere. You can also use block explorers on your own node to check and verify any transaction dating back to the origin of the network.
Earning money routing transactions
A common misconception among enthusiasts is that the only way to earn money from the BTC network is by mining. However, with layer 2 payment protocols like the Lightning Network, you can earn a small percentage of the transacted sum as a reward for running the node and routing transactions.
NOTE: This is possible only when you run both the BTC node as well as the node of the layer 2 protocol. With the BTC node itself, there is currently no way of earning any money.
How to Run a Bitcoin Node?
Now that you know what a Bitcoin node is and how it helps the Bitcoin network, here’s how you can run one on your own PC.
To start, you need to possess the following requirements — a computer operating on the latest version of Windows, MacOS or Linux, 7GB of disk space available at a read/write speed of at least 100 MB/s, an unmetered broadband internet connection with a speed of at least 400 kbps, and 6-hours of assured running of the set-up a day.
Once you have all of the requirements, install the latest version of Bitcoin Core for your operating system. Install the program, choose where the data will be stored, allow the application through the firewall and follow the steps shown within the application. You can also get step-by-step installation guidelines here.
Conclusion
Running a Bitcoin full node comes with its own set of risks. For one, it could be illegal to run the bitcoin node in your geographical location. Secondly, the network usage could sometimes exceed limits (if any) and result in higher utility bills. Lastly, running a node could leave you open to viruses, if not done with appropriate precautions.
Bitcoin is a revolutionary store of value and an alternative to fiat currency. Before you choose to invest your time, money, and efforts into it, it is important that you understand every aspect of it — pros as well as cons — to properly take advantage of this possible currency of the future. The same applies to running a BTC node.
First Published:
Jul 18, 2022 5:40 PM
IST
