What is a Bitcoin node?

The Bitcoin network relies on two key components: miners and nodes. Both play crucial roles in the operation and security of the blockchain. In this article, we will explain as simply and precisely as possible what a Bitcoin node is and how it works.

What does a Bitcoin node do?

Simply put, a Bitcoin node is a computer that runs the Bitcoin software the most known being the Bitcoin Core, and connects to other computers running the same software. These interconnected computers share information and adhere to specific rules known as the Bitcoin protocol. Nodes are fundamental to maintaining the integrity and functionality of the Bitcoin blockchain, making them indispensable for the Bitcoin network.

Role and Functions of a Bitcoin Node

1. Validation of Transactions and Blocks:
   • Each node independently verifies transactions and blocks against the consensus rules of the Bitcoin protocol. This ensures that only valid transactions and blocks are added to the blockchain.
2. Propagation of Transactions and Blocks:
   • Nodes propagate newly validated transactions and blocks to other nodes in the network. This helps ensure that all nodes have the most up-to-date information, maintaining the blockchain's consistency across the network.
3. Storing the Blockchain:
   • Full nodes store a complete copy of the entire blockchain, from the genesis block to the most recent block. This comprehensive history allows nodes to verify the integrity of the blockchain and prevent double-spending.
4. Ensuring Network Consensus:
   • By following the same set of rules (the Bitcoin protocol), nodes collectively ensure that the network reaches consensus on the state of the blockchain. This decentralised consensus is what makes Bitcoin secure and resistant to censorship.

Types of Nodes

There are different types of nodes in the Bitcoin network: full nodes and light nodes.

Full Nodes

A full node is a computer that runs the Bitcoin Core software and synchronises a copy of the entire Bitcoin blockchain. Full nodes play a crucial role in validating transactions and blocks, ensuring that all network participants adhere to the consensus rules established by the Bitcoin protocol.

Full nodes perform the following functions:

• Transaction Validation: They independently verify every transaction against the Bitcoin protocol rules.
• Block Validation: They check the validity of each new block before it is added to the blockchain.
• Network Propagation: They relay validated transactions and blocks to other nodes, helping to keep the network decentralised and synchronised.

Running a full node requires significant resources, including substantial storage space and bandwidth. As of 2024, a full Bitcoin blockchain exceeds 400 GB, making it impractical for most smartphones and low-capacity computers to run a full node. This resource intensity is why a lighter version, known as a light node, was developed.

Light Nodes

A light node, also known as a Simplified Payment Verification (SPV) node, does not store a full copy of the blockchain. Instead, it downloads only block headers, which are much smaller in size. Block headers contain summary information about blocks, such as the hash of the previous block, the timestamp, and the Merkle root, which is a cryptographic summary of all transactions in the block.

The advantages of light nodes include:

• Lower Storage Requirements: Light nodes require significantly less disk space, making them feasible for smartphones and low-capacity devices.
• Reduced Bandwidth Usage: They consume less bandwidth as they do not download full blocks.

However, light nodes rely on full nodes to fetch full transaction data and validate transactions. They must connect to a public server or a specific full node to operate effectively. This dependency means light nodes do not contribute to the network's decentralization to the same extent as full nodes.

Nodes and Miners

Miners also operate nodes within the Bitcoin network, but their primary function differs significantly from that of standard nodes. While standard nodes are primarily responsible for validating existing blocks and transactions to ensure they comply with the network's rules, miners are responsible for creating new blocks and adding them to the blockchain.

Miners use specialised hardware, known as ASICs (Application-Specific Integrated Circuits), which can compute several terahashes per second (TH/s). In comparison, a typical consumer-grade computer can perform around 100-200 million hashes per second (MH/s). To put this into perspective, 1 terahash equals 1,000,000 megahashes. The most advanced mining hardware can execute around 400 terahashes per second, which is vastly more powerful than the capabilities of a standard computer.

Miners perform the following functions:

• Block Creation: Miners gather pending transactions from the mempool and assemble them into a candidate block.
• Proof of Work: To add a new block, miners must solve a complex mathematical puzzle, known as Proof of Work (PoW). This process involves finding a nonce that, when hashed with the block's data, produces a hash with a specific number of leading zeros.
• Network Validation: Once a miner solves the puzzle, the new block is broadcast to the network. Full nodes then validate the new block and its transactions against the Bitcoin protocol rules before adding it to their copy of the blockchain.

Successful miners receive a reward in Bitcoin (BTC) for each block they add. This reward includes the block subsidy (newly created bitcoins) and the transaction fees from the transactions included in the block.

How Can I Run a Node?

Running a full Bitcoin node today is relatively straightforward thanks to the availability of complete software packages. For example, Umbrel provides an easy-to-use package that can be installed on a Raspberry Pi (a small, affordable computer) along with an external hard disk. This setup makes it accessible for enthusiasts with some technical knowledge.

Alternatively, you can download the Bitcoin Core software from bitcoin.org. This software requires a computer with sufficient processing power, memory, and storage space. The website provides a comprehensive guide and roadmap to help you through the process. Key requirements include:

• Hardware: A modern computer with at least 2 GB of RAM and 500 GB of free disk space.
• Internet: A high-speed internet connection with at least 50 GB of upload/download data per month.
• Technical Knowledge: Basic understanding of computer systems and command-line operations.

Should I Run a Node?

Deciding whether to run a Bitcoin node involves weighing the benefits against the requirements and effort involved.

Benefits:

• Support the Network: While the Bitcoin network has many nodes to function efficiently, running a node contributes to its decentralisation and security.
• Privacy and Control: Running your own node allows you to interact with the Bitcoin blockchain directly, offering greater privacy and control over your transactions. You can verify your own transactions without relying on third-party services.

Considerations:

• Technical Expertise: Running a node requires some technical know-how.
• No Financial Incentive: Unlike mining, running a node does not provide monetary rewards. It is a voluntary contribution to the network's health.
• Resource Commitment: Maintaining a node involves continuous internet usage and storage capacity. It is less user-friendly compared to using third-party services for trading, sending, and storing cryptocurrencies.

Running a Bitcoin node is not just for those looking to support the network; it offers a deeper engagement with the Bitcoin ecosystem. By running a node, individuals contribute to the robustness and resilience of the network, ensuring it remains secure and decentralized. However, the decision to run a node should consider the technical requirements, commitment of resources, and the user's personal interest in maintaining greater control and privacy over their Bitcoin transactions.

Ultimately, while there is no financial reward for running a node, the benefits of enhanced privacy, control, and contribution to the network's health make it a worthwhile endeavor for many Bitcoin enthusiasts. Whether you choose to run a full node or a lightweight node, your participation helps strengthen the Bitcoin network, promoting its long-term success and stability.

The information provided in our articles is intended solely for general informational purposes and does not constitute (financial) advice.