Let me explain quickly that a Bitcoin node is any computer which runs a piece of software (Bitcoin Core) that has some important jobs:
Your Bitcoin node needs to keep a copy of the entire Bitcoin blockchain. It has to connect with other nodes, forming a network of communication, which propagates transactions (transactions are kept in a “mempool”, i.e., the queue of transactions waiting to be included in the next block, and thus added to the blockchain). It needs to check that all additions to the blockchain are valid, and reject those that are not valid. It will provide details about the blockchain — such as balances — to other types of software that ask, like wallets. And it will provide a copy of the blockchain to any new node that wants to join. The new node then independently checks that every transaction in the copy it receives is valid. It does not actually “trust” the connected node.
To run a node, you download Bitcoin Core software, and then let it copy the blockchain from other nodes, and your node verifies each block itself. You then leave it on, and new blocks are received roughly every 10 minutes (the blocks contain transactions taken from the mempool). Your node will check if the block is valid, and if so, add it to its copy of the blockchain.
A dodgy block gets rejected, not because everyone else rejects it, and not because everyone copies their neighbor, but because the block is invalid according to the rules contained in the Bitcoin Core software, and everyone else that is running the same software will also reject that dodgy block.
Your Bitcoin wallet does not keep a copy of the blockchain, and is usually separate from Bitcoin Core (although Bitcoin Core does have a wallet feature). Your wallet just holds your keys. It has to ask a Bitcoin node, “Hey Mr. Node, this address of mine, does it have any bitcoin in it?” Technically that’s not quite accurate, but this is sufficient for now.
Running your own node means you don’t ask other people what their copy of Bitcoin Core is doing. It’s your own copy of Bitcoin Core, and you don’t need to trust other people. Your wallet can ask YOUR copy of the Bitcoin blockchain (making the digital connection between your wallet and node is the technically challenging and critical part, not just running the node — an article for another day).
So with the preamble done, let me next explain why it is important to run your own node:
Reason 1
Privacy.
When your wallet tells you your bitcoin balance, it asks a RANDOM public Bitcoin node what balance each of your addresses contains. It then gives you the results, and you see your total bitcoin in that wallet. Even empty addresses which you haven’t used get queried. Surveillance companies run some of these nodes. “What the Hell?” Yes, it’s true.
You are telling a random entity, possibly a surveillance company, your IP address (which can be used to identify you), and that you have a Bitcoin wallet, and ALL of your current and future addresses you'll use within that wallet, and all the balances of all those addresses, now and later. Providing this information to surveillance companies is dangerous for many reasons. For example, this data can be leaked intentionally — to the government when requested — or unintentionally (to hackers). Governments may target Bitcoiners with heavy wealth taxes or confiscation, as the US government once did for gold with order 6102 in 1933, and hackers may target you to extort or trick you out of your bitcoin.
Reason 2
You can confirm for yourself trustlessly that you are receiving real bitcoin.
For example, when you sell something, a technically sophisticated buyer could potentially manipulate which node your wallet connects to. They could send you counterfeit bitcoin, and your wallet would think it’s received real bitcoin because the malicious node lied to your wallet. Granted, this is very unlikely, but the fact that you can prevent it by running a node makes the development of this kind of attack not interesting or fruitful. What actually happens with this attack? The scammer somehow gets your Bitcoin wallet to read the wrong blockchain from a malicious node. He moves supposed bitcoin on THAT blockchain, not the real one, and your wallet thinks you’ve been paid.
If you get scammed in this way, you may accept this counterfeit as final payment, and may send goods in exchange for the fake bitcoin. One day, when you connect to a genuine Bitcoin node, your wallet will show that you never in fact received bitcoin. Your balance will be lower than what you thought it should be, because the fake transfer never existed on the real Bitcoin blockchain.
You can prevent this by connecting your wallet to a node you trust, but even better is to connect to your own node. “Don’t trust, verify,” is the Bitcoiner’s mantra.
Not doing this is kind of like accepting gold as payment, and asking a random person to use their XRF analyser to check if the gold you received is real. You don’t know if that random person is on the side of the buyer, or if they are honest.
You might ask, “No trust? Wait, aren’t I trusting Bitcoin Core when I download it? How do I know THAT’s not fake?” Yes and no. There are ways to verify that the software you downloaded is genuine, but that’s not for this article.
You might then ask, “Aren’t I trusting the developers that the genuine copy is behaving as I expect?” Actually yes, unless you write the software yourself, or read the code, or pay someone to read the code — but then you are trusting them. There has to be some level of trust, but the idea is to keep it to a minimum. (Just saying that might get me in trouble with the Bitcoin mob, shhh!) Most people (me included), can’t and won't read the code, so there is some element of trust. The trust is that hundreds, maybe thousands, of developers’ eyes are going over the code looking for errors and problems before it is released. It’s not easy to make changes to Bitcoin Core, and this is a feature, not a bug. Using the gold XRF analyser analogy, you are probably not going to build one from scratch to check whether or not your gold is real, and that’s okay.
Reason 3
Defend the Bitcoin rules from unwanted changes — like scarcity or block size.
If a group of "powerful" people banded together, as they did in 2017, and decided to try to change the rules of how Bitcoin works (for example, by increasing the block size), you can choose to not upgrade your node to the new system and keep your current node. If you are more than the minority, there will be a pool of people running the unchanged Bitcoin Core and a pool of people running the changed version — a fork. This is how Bitcoin Cash was born. The new version was unanimously rejected, but those who lost the war kept running their nodes and mining bitcoin cash as well. Those who owned bitcoin then also owned bitcoin cash. For a given address, there was one balance on the Bitcoin blockchain, one balance on the Bitcoin Cash blockchain.
If you weren’t running your own node at the time, you had no say in this war. Your wallet might have connected to a Bitcoin Cash node and someone might have paid you in bitcoin cash instead of with bitcoin. You then might have given up your goods in exchange for coins that didn’t meet the monetary policy you preferred.
Reason 4
If you run a node, and leave it on 24 hours a day, this helps the network.
The more nodes that are running, the faster transactions can propagate for everyone, and the harder it is to shut down Bitcoin. In order to kill Bitcoin, every single copy of the blockchain must be destroyed.
Reason 5
Be an "Uncle Jim".
In the future, it may be too challenging for EVERYONE to run their own node, but we don’t want people trusting random nodes. I imagine there will be a technical person in every social “circle of trust” ("Uncle Jim") for people to connect their wallets to. This tiny trade-off is far better than connecting to random public Bitcoin nodes.
If you learn to run your own node, then YOU also become a kind of human node, because you could one day help someone else to run and use their own node.
Reason 6
Coolness factor and street cred.
Running your own node is super cool, and gives you a great appreciation of the power of Bitcoin. You’ll probably end up buying more.
Conclusion:
Hopefully, it is clear now why you should run a node. There are various ways. If you want individual help, see here. For the computer illiterate, help is available at www.bitcoin4boomers.com.
This is a guest post by Arman the Parman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
FAQs
Running a Bitcoin node allows a user to interact with the Bitcoin network more privately and securely. A Bitcoin node enables a user to prove their ownership of bitcoin without relying on any third party. Setting up a Bitcoin node is relatively simple, and it strengthens the robustness of the network.
What are the advantages of running your own Bitcoin node? ›
Running a Bitcoin node allows a user to interact with the Bitcoin network more privately and securely. A Bitcoin node enables a user to prove their ownership of bitcoin without relying on any third party. Setting up a Bitcoin node is relatively simple, and it strengthens the robustness of the network.
Does running a Bitcoin node make money? ›
You do not earn Bitcoin by running a full Bitcoin node as a way of validating blocks. However, it is possible to earn small amounts of money if you validate transactions on the Lightning Network that are routed through your node by charging a percentage of the funds routed as a transaction fee.
What does it mean to run your own node in Bitcoin? ›
Running a node means installing “client” software on a machine, which will download, verify, and propagate new blocks across a blockchain network. There are currently two types of node client software: execution clients and consensus clients.
How much does it cost to run a Bitcoin node? ›
One of the most popular devices for Bitcoin nodes is the Raspberry Pi, a small computer, about the size of a human hand. A Raspberry Pi has enough processing power to operate a Bitcoin node and only costs about $50. Storage. You will need an external drive to have enough memory to store the entire blockchain.
What are valuable benefits of having a node? ›
You may not get the financial rewards that validators earn, but there are many other benefits of running a node for any Ethereum user to consider, including privacy, security, reduced reliance on third-party servers, censorship resistance and improved health and decentralization of the network.
What are the benefits of running your own ETH node? ›
Benefits to you
Running your own node enables you to use Ethereum in a private, self-sufficient and trustless manner. You don't need to trust the network because you can verify the data yourself with your client.
What are the risks of Bitcoin nodes? ›
Running a full node comes with certain risks. For example, if you are not careful with your security, your node could be hacked and used to steal bitcoins. Additionally, if the Bitcoin network is ever compromised, your full node could be used to help attack other nodes on the network.
What are the best nodes for passive income? ›
Crypto investors can earn passive income through validator nodes, which store a copy of a blockchain's history and verify new transactions. Top cryptos for this include Ethereum, Solana, Cardano, Avalanche, and Polkadot.
How do strong nodes make money? ›
STRONG allows you to set up nodes that offer rewards every day. Currently,building a node requires 10 STRONG tokens(plus gas fees). Then each node will receive 0.091 STRONG tokens as a reward. This is a huge return on capital.
There are direct privacy and security benefits of running your own node. The privacy benefits include protecting personal information and not registering on third-party services. You also do not need to rely on a block explorer to verify transactions. By running your own node, you protect your IP.
Is running a Bitcoin node the same as mining? ›
A bitcoin node vs miner is both important for the health of the Bitcoin network, but they have different roles. Miners are responsible for verifying transactions and adding them to the blockchain, while nodes keep a copy of the entire blockchain and relay transactions.
What is owning a node? ›
Having your own node means you don't need to trust third parties about the state of the network or the authenticity of the transactions submitted to the network for validation.
What do I need to run a Bitcoin node? ›
Minimum Requirements
- Desktop or laptop hardware running recent versions of Windows, Mac OS X, or Linux.
- 7 gigabytes of free disk space, accessible at a minimum read/write speed of 100 MB/s.
- 2 gigabytes of memory (RAM)
- A broadband Internet connection with upload speeds of at least 400 kilobits (50 kilobytes) per second.
Running an Ethereum node can be very profitable if you are willing to invest the time and money into setting up and maintaining the node. Node operators not only benefit from the potential revenue generated from mining tokens, but also contribute to the security and development of the Ethereum network.
How much memory do I need to run a Bitcoin node? ›
HARDWARE AND BANDWIDTH REQUIREMENTS:
RAM requirements: 4 GB of RAM. Bandwidth requirements: Internet connection with upload speeds of at least 50 Kbps A full node can have upload usage of over 200 GB a month and download usage of over 20 GB a month.
How much does a strong node make a month? ›
At its current price you would earn about $1328 each month for every Ethereum Strong Node. However, prices can rise and fall and a higher price ensures a quicker return on investment.
Can you make money from nodes? ›
Some blockchain networks, like DASH, contain a specific type of node referred to as “master nodes.” Those who run these nodes can receive large payouts, as masternodes receive a portion of the block rewards each time a new block is mined.
How much is a node worth? ›
The current price is $0.00000388 per NODE.
How much money can you make running an ETH node? ›
Compare the percentage returns available: running a validator node offers an average annualised return of around 14.2%. Staking ETH through a third-party pooled service like a staking pool can earn an average of 13%, while through an exchange is more likely to earn in the region of 12%.
Ethereum requires every validator to stake a minimum of 32 ETH or more to run a validator node. Validators who have staked 32 ETH or more with the Ethereum Network can validate transactions. For doing so, they will receive rewards that come from gas fees.
What are the risks of running ETH node? ›
Ethereum 2.0 validators who run their own node run the risk of losing their keys, forgetting the password, or damaging the hardware where the keys are stored. In some cases, the hardware may have been physically damaged — but it's also possible for crucial data to be lost as a result of a technical fault.
What are the three types of nodes in Bitcoin? ›
Full nodes, miners, and light nodes are the main types of Bitcoin node.
Who controls Bitcoin nodes? ›
Miners: Bitcoin's network is protected by miners. Despite their prominent position, they have no more control over the network than anyone else. Nodes: Bitcoin's referees are called nodes. They keep track of every transaction and verify every block before it is added to the network.
What happens if all Bitcoin nodes shut down? ›
If all bitcoin nodes and servers were to shutdown there would be no bitcoin network. With no network there is no bitcoin. The network is necessary for transactions to be processed and confirmed. This, of course, would never happen in the foreseeable future.
How to make $100,000 per year in passive income? ›
6 Ways To Make $100K Per Year With Passive Income
- Start a Niche Blog. Chelsea Clarke, founder of HerPaperRoute, says starting a niche blog requires a lot of upfront work. ...
- Create a Course. ...
- Invest in CDs. ...
- Buy Stocks. ...
- Consider Bonds. ...
- Purchase Real Estate.
Top 10 Ways to Make 5K a Month
- Freelancing with Skills You Already Have.
- Blogging or Content Creation.
- Virtual Assistant.
- Start an Amazon FBA Business.
- Taking Pictures and Selling Stock Photos.
- Proofreading or Editing.
- Facebook Marketing.
- Self-Publishing Books on Amazon KDP.
The current price is $6.59 per STRONG.
How much does it cost to set up a strong node? ›
How do I create / setup a Strong node? You'll need to have your 10 STRNGR tokens in a wallet with MetaMask plus enough ETH to cover $15 first month maintenance plus enough ETH to cover all gas fees.
Which crypto node is most profitable? ›
Best Masternode Projects – Most Profitable Masternode Cryptos
- DASH.
- DeFiChain.
- PIVX.
- DefiChain.
- StrongBlock.
- SysCoin.
- SmartCash.
- Firo.
A full node must download every transaction that has ever been executed, all new transactions and all block headers while storing data on every unspent transaction output until it is spent.
How many full Bitcoin nodes are there? ›
There are currently over 10,000 reachable full nodes distributed across the world. It is likely that the actual number of nodes is much higher. These are just those that can be reached by any node. Many nodes are inaccessible for several reasons.
What is node and why do I need it? ›
Node allows developers to write JavaScript code that runs directly in a computer process itself instead of in a browser. Node can, therefore, be used to write server-side applications with access to the operating system, file system, and everything else required to build fully-functional applications.
What is the first thing a node does when receiving a transaction? ›
First, nodes broadcast and relay transactions to other nodes and miners. Miners batch these transactions into blocks and publish those blocks to the blockchain, validating the transactions. Nodes receive these blocks, share them amongst one another, and verify that the miners are following the rules of the network.
What is the highest number of nodes ever recorded on the BTC blockchain? ›
At the time of writing, Bitnodes' data puts the current network node count at about 12,835, Coin. Dance, another tracking website, also has Bitcoin's node count at a new all-time high of 12,825.
What is the difference between a Bitcoin node and a lightning node? ›
A node refers to software that participates in a network. A bitcoin node participates in the bitcoin network. A lightning node participates in the lightning network. Any bitcoin application that wants to show, send, or receive transactions needs a way to connect to a node.
How many nodes should a blockchain have? ›
7 nodes (servers/computers), all connected to each other, running a blockchain together.
What do node operators do? ›
Node Operators run the chain's software, certifying transactions as they are entered into the chain by writing new blocks and broadcasting them to the network.
How big is the Bitcoin node? ›
Presently, the bitcoin blockchain size is around 15 GB, however, the bitcoin blockchain size is increasing at the speed of around 1 MB per hour.
How do I become a Bitcoin validator? ›
To become a validator, a network participant must lock up a specific amount of the network's native cryptocurrency. This is called crypto staking. They provide this amount as collateral to ensure their honesty.
Running a Bitcoin node allows a user to interact with the Bitcoin network more privately and securely. A Bitcoin node enables a user to prove their ownership of bitcoin without relying on any third party. Setting up a Bitcoin node is relatively simple, and it strengthens the robustness of the network.
What happens when you run a node? ›
Running a node means installing “client” software on a machine, which will download, verify, and propagate new blocks across a blockchain network. There are currently two types of node client software: execution clients and consensus clients.
How much computer power is needed to mine Bitcoin? ›
As the difficulty and complexity of Bitcoin mining has increased, the computing power required has also gone up. Bitcoin mining consumes about 121 terawatt-hours of electricity each year, more than most countries, according to the Cambridge Bitcoin Electricity Consumption Index.
How much RAM does node need? ›
In Node < 12 , it sets a limit of 1.5 GB for long-lived objects by default. If this exceeds the memory available to your dyno, Node could allow your application to start paging memory to disk.
How many computers do I need to mine Bitcoins? ›
The resources required for mining Bitcoin include: At least one specialized computer (called an Application-specific Integrated Circuit or ASIC miner), which is specifically designed to compete for and support a particular cryptocurrency. A reliable and inexpensive energy supply. A dependable internet connection.
Is running a blockchain node profitable? ›
Blockchain nodes can sometimes eat up a lot of time and resources, but they are most often profitable for miners or validators. Full nodes are more profitable since they validate blocks and store the entire blockchain's history, so validator nodes can expect to generate passive income.
How many nodes does Bitcoin need to work? ›
And each node has a role in the network. But the Bitcoin blockchain has four primary nodes.
What you need to build a Bitcoin node? ›
If you can meet the following requirements, you'll have an easy-to-use node.
- Desktop or laptop hardware running recent versions of Windows, Mac OS X, or Linux.
- 200 gigabytes of free disk space, accessible at a minimum read/write speed of 100 MB/s.
- 2 gigabytes of memory (RAM)
Strong nodes are run as a service; therefore, they do not require hardware and this allows anyone, even non-technical people, to build a blockchain-compliant node in seconds and get paid for running it.
Who controls Bitcoin miners or nodes? ›
Nodes are Bitcoin's referees. They maintain the ledger of all transactions and validate each block before it can be added to the chain. Like referees, nodes enforce the rules, they don't make them up. They can't make changes or decide to arbitrarily follow some directives and not others.
Dance, another tracking website, also has Bitcoin's node count at a new all-time high of 12,825.
How many strong coins does it take to make a node? ›
STRONG allows you to set up nodes that offer rewards every day. Currently,building a node requires 10 STRONG tokens(plus gas fees).
What does a full node do? ›
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.”
Can anyone be a Bitcoin node? ›
Anyone can become a Bitcoin node operator and participate in securing the network by simply downloading the Bitcoin Core software, thus making the blockchain transparent, immutable and decentralized.
How much memory is needed to run a Bitcoin node? ›
Hardware Requirements for Bitcoin Node
A desktop or laptop hardware with at least 500 gigabytes HDD or SSD and 2 gigabytes of memory (RAM). Note that you need as much as 350 gigabytes of storage to download the entirety of the Bitcoin blockchain.
What are the different types of Bitcoin nodes? ›
There are four main types of Bitcoin nodes: full nodes, super nodes, light nodes, and mining nodes. The first three have similar functions, but the odd one out is the mining nodes.
