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What is a Bitcoin node?

May 28, 2021
An illustration of nodes underneath the Bitcoin logo.
The beginner's guide to Bitcoin nodes: To fulfill and validate Bitcoin transactions, it’s also necessary to broadcast messages across a network using nodes. Here's how it works.

The introductory guide to Bitcoin nodes

Bitcoin is a decentralized peer-to-peer (P2P) network and requires an intricate amount of connected machinery to maintain both the infrastructure and integrity of the network. The lack of a trusted third party to validate and relay transactions on the Bitcoin blockchain means ordinary people must step up to the task.

[Read now: What Is Bitcoin’s Taproot Upgrade and Why Does It Matter?]

Miners that process transactions are just one piece of the Bitcoin network. To fulfill and validate transactions, it’s also necessary to broadcast messages across a network using ‘nodes.’ This is the first step in the transaction process that results in a block confirmation.

What are nodes?

Computer hardware resources on a network are referred to as nodes, which can either be a computer system, a connection point, a redistribution point, or a communication point. The nodes are in charge of ensuring your transactions are swift, secure, and performed in a decentralized manner.

All blockchain networks have several nodes in place that ensure the smooth running of transactions.

What are Bitcoin nodes?

A Bitcoin node is a computer connected to other computers globally to bolster the entire Bitcoin network. Nodes perform a vital role in the Bitcoin network: they function as validators [KT1]that constantly monitor the Bitcoin blockchain to filter valid and legitimate Bitcoin transactions from non-legitimate ones.

The Bitcoin network comprises computers (nodes) around the world running software known as the “Bitcoin Core" software. The Bitcoin Core software is responsible for verifying transactions and maintaining blocks on the Bitcoin blockchain. The vast distribution of nodes across the network, coupled with the fact that anyone with the required computational resources can set up a node, makes Bitcoin a secure, decentralized payments solution. 

Each node on the network is autonomous, meaning that when you run a Bitcoin client, it can make independent decisions based on the type of transaction you’re trying to complete. This is what makes the Bitcoin network a completely decentralized network as there is no centralized body that is the ultimate validator. Currently, there are about 83,000 active Bitcoin Core nodes, according to a popular Bitcoin Core developer. 

What does a Bitcoin node do?

A node on the Bitcoin network essentially performs three functions. 

First, each node on the Bitcoin network has been programmed to follow a set of rules that enables it to check the transactions it receives. The node will only proceed to complete the transaction if all the rules have been met and the transaction is deemed valid. One such rule is that you must have an equal or greater amount of Bitcoins than you are trying to send, or else your transaction will not go through to other nodes.

Furthermore, nodes are set up to broadcast information about transactions on the network. There are two types of transactions that nodes share, namely, fresh transactions and confirmed transactions.

Fresh transactions[KT2] are transactions that have recently entered the network. These transactions are bounced around the network until they are written into the blockchain. 

Confirmed transactions are transactions that have been confirmed and broadcast to the network. These are stored in blocks of transactions, not individually.

Nodes keep a copy of all confirmed transactions, which are held together in the blockchain. Each node has a copy of the entire blockchain information and shares it with other nodes on an as-needed basis.

Types of Bitcoin nodes

The main types of nodes on the Bitcoin network are:

Full nodes

Full nodes perform the function of holding and distributing copies of the entire blockchain ledger by validating the history of the blockchain and relaying them to further full nodes on the network. It can trace and validate transactions back to the first block (i.e., genesis block). The estimated size of the entire Bitcoin blockchain is over 340 Gigabytes. The more nodes there are on the Bitcoin network, the more decentralized and secure the network. 

Supernodes

A supernode is another type of full node. They operate around the clock to connect full nodes to each other and spread the blockchain across the entire network. Super nodes serve as information or redistribution relays to ensure everyone has the right copy of the Bitcoin blockchain.

Light nodes

Light nodes — also known as thin nodes — perform similar functions to full nodes but in a smaller capacity. They contain small portions of the blockchain as opposed to the entire copy. The main task of a light node is to verify transactions in the blockchain with the adoption of a technique known as Simplified Payment Verification (SPV).

Light nodes don’t need to be as powerful as full nodes and are much cheaper to own and maintain as they process less of the blockchain. However, they fulfill the critical function of helping to decentralize the blockchain network further.

Light nodes only download the block header, also referred to as the “summary of a block.” This contains a hash reference to the previous block, the mining time, and the nonce (unique identifying number) of previous transactions. The information is used to confirm the validity of the blockchain and whether it has been relayed to other nodes on the network. 

If a full node is compromised with an incorrect copy of the blockchain, the light nodes can serve as a critical adjudicator by confirming the correct blockchain. [KT3] 

Mining nodes

Mining nodes solve complex computational problems using specialized hardware through “mining”, the process of creating and adding new blocks to the blockchain. Mining nodes are competitive nodes on the Bitcoin network because each miner (node) aims to be the first to create a new block in the blockchain and also provide proof that it is the one that has performed the required work (“Proof of Work”) to create the new block. Successful miners receive Bitcoin reward for creating the new block.

The benefits of running Bitcoin nodes

There are several advantages to running a node on the Bitcoin blockchain. Some of these are:

Running your node gives you full control of your Bitcoin holdings. It also ensures that all the rules of the Bitcoin network are adhered to and adds to the integrity of the blockchain. 

Running a full node gives you a higher degree of privacy and anonymity compared to using third-party servers to process your transactions. Said servers can expose your wallet address and compromise your privacy.

Individuals who run a Bitcoin node can monitor the health of the blockchain and contribute to the stability of the system.

Bitcoin nodes are easy to set up and inexpensive to maintain. All it needs is the latest version of the Bitcoin core client.

Bitcoin nodes also help double-spending—when users attempt to spend the same digital token twice. To function seamlessly, Bitcoin needs any fully functioning nodes—those with the complete blockchain stored on them. The more nodes there are, the more secure the network. 

But the number of nodes on the Bitcoin network is dropping—it’s currently estimated at 83,000 as compared to 200,000 in 2017. That’s a troubling sign for developers and the network as a whole.[KT6] 

The answer seems to be to broadcast the Bitcoin network into space.

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