Nodes are critical aspects of blockchain security. Broadly speaking, a
cryptocurrency node is a participant in a blockchain network. Without
blockchain nodes, there can be no blockchain.
The key feature that makes blockchain
technology unique, and part of why cryptocurrency has been so
revolutionary, is decentralization. Bitcoin and most other cryptocurrencies
aren’t controlled by a central server or group of servers. Instead, the network
functions in a peer-to-peer (P2P) manner. People interact with each other
directly rather than through a third-party intermediary, thanks to network
Blockchain Nodes Work?
For decentralization to work, there has
to be a way for the network to maintain its integrity. Everyone has to be
assured that all transactions are valid and that no one on the network is
cheating by double spending or
The process of everyone on the network
agreeing that transactions are valid in the absence of a central authority is
known as “achieving consensus.” It is the network nodes that achieve this
consensus among users, helping to make the blockchain secure.
Consensus refers to the rules by which a
blockchain network operates and confirms the validity of information written in
blocks. Confirming this information can be complicated with large networks
involving large numbers of people, hence the need for a consensus algorithm.
The original consensus algorithm is
Bitcoin’s proof-of-work (PoW) algorithm. Proof-of-Stake (PoS) is
another popular consensus algorithm that works somewhat differently but seeks
to achieve the same goal. Many DeFi protocols utilize PoS. Both
algorithms rely on full nodes for the validation of transactions and
enforcement of network rules.
For the sake of simplicity, in this
article we will assume that someone is interested in learning about Bitcoin
nodes that run on PoW.
Anyone can download the entire Bitcoin
blockchain and validate blocks. This increases both the security and the
decentralization of the network, as more copies of the ledger come into
existence and can be referenced by others. Bitcoin nodes can be run by anyone
in the world with the proper hardware and an internet connection.
7 Types of
To recap: A node is one computer in a
network of many that follows rules and shares information.
The term “node” is sometimes used
interchangeably with the term “full node,” but they are not the same. A “full
node” is a computer in the Bitcoin network that stores and synchronizes a copy
of the Bitcoin network’s entire blockchain history.
Full nodes are important for several
reasons, not the least of which being that they vote on proposed changes to the
network. When more than 51% of full nodes don’t agree on a proposal, it gets
skipped. Sometimes this leads to a hard fork, as was
the case in 2017 with the Bitcoin Cash fork.
While there are several types of full
nodes, there are also lightweight nodes. Below, we’ll highlight both
lightweight and full nodes.
1. Light Nodes
Lightweight nodes or “light nodes” do
not hold full copies of the blockchain. Light nodes only download blockheaders,
saving users significant download time and storage space. Nodes of this nature
depend on full nodes to function and are used for simplified payment
2. Archival Full Nodes
Most often, when someone uses the term
“full node,” they are referring to an archival full node. This is the primary
node type that forms the backbone of a blockchain network. Archival full nodes
are servers that host the entire blockchain, with every single transaction
recorded in their databases. The main task of these nodes is to validate blocks
and maintain consensus.
Archival nodes can be broken down
further into two subcategories: nodes that can add blocks to the chain and
those that cannot.
3. Pruned Full Nodes
A pruned full node is one that saves
hard disk space for its users by “pruning” older blocks in the blockchain. This
type of node will first have to download the entire blockchain from the
beginning. After that, it will begin deleting blocks beginning with the oldest
and continue until the node only holds the most recent transactions up to a set
size limit. If a node operator were to set the size limit to 250 MB, then a
pruned full node would hold the most recent 250 MB worth of transactions.
4. Mining Nodes
In crypto mining,
miners are either full or light nodes that try to prove they’ve completed the
work required to create a new block. This is where the term “proof-of-work”
comes from. To accomplish this task, miners have to either be an archival full
node themselves or get data from other nodes to learn the current status of the
blockchain and how to work on finding the next block. (Those who seek to run
mining nodes might want to take into account crypto mining electricity
5. Authority Nodes
Authority nodes are used by consensus
algorithms for networks that aren’t fully decentralized, including Delegated
Proof of Stake and Proof of Authority. In these networks, either the
development team will decide how many authority nodes are needed and who will
run them, or the community could vote for the decision. The task of these nodes
is the same as full nodes in other networks.
Masternodes cannot add blocks to a
blockchain. They only serve to validate and record transactions. Running a
masternode can earn users a share of the network’s rewards. Doing so requires
first locking away a certain amount of money in the form of the network’s
native token. DASH is an example of a network that uses masternodes.
7. Lightning Nodes
Lightning nodes don’t quite fit the mold
of any of the nodes discussed so far. The main idea of a lightning node is to
establish a connection between users outside of the blockchain, enabling what
are referred to as “off-chain transactions.”
This reduces the load on the network and
allows for much faster and cheaper transactions. Bitcoin lightning transactions
typically cost 10 or 20 satoshis, or the equivalent of a fraction of a penny.
How to Set Up
and Run a Full Node
Running a full blockchain node comes
down to the following:
• Choose a blockchain (Bitcoin, for example)
• Acquire the hardware and/or software needed
• Start running the node
The first thing required for running any
kind of node is the necessary hardware. This often involves a small computer
like a Raspberry Pi. There are three different ways to run a full node. They
• Hosting a node in the cloud via Amazon Web Services or
• Running a node on your local device (which requires a lot
of hard disk space and RAM)
• Using a “node-in-a-box” solution or building one from
After that, it’s just a matter of
maintaining and monitoring the node.
People might choose to run full nodes
for a variety of reasons, including increased privacy or a desire to support
their network of choice. Lightweight nodes and full nodes alike come with
wallets that can be used for making cryptocurrency transactions. Full nodes
provide greater privacy, as outside observers have a hard time distinguishing
between transactions being processed by the node and transactions sent by the
person running the node.
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