Bitcoin node: What is it and why you should run a bitcoin node

Bitcoin node: What is it and why you should run a bitcoin node

Gianluca Lombardi August 21, 2023
7 min read

Bitcoin nodes are the unsung heroes of the world’s leading cryptocurrency. Working tirelessly behind the scenes, these decentralized network nodes power Bitcoin’s blockchain by validating transactions and blocks. Without them, the Bitcoin network would collapse. But what are these node things, and what exactly do they do?

In this article, we peel back the layers of Bitcoin’s infrastructure to uncover the critical role nodes play in maintaining the network’s integrity. You’ll learn what nodes are, why they’re important, and how you can even run one yourself to bolster Bitcoin’s resilience. With more nodes securing the network, Bitcoin becomes even more censorship-resistant and decentralized.

We hope you find this page insightful and informative as you delve into the fascinating world of smart contracts. Don’t forget to explore our wider Technology Hub for more exciting topics and resources.

What is a bitcoin node and how does it work?

A “Bitcoin node” is basically a computer that runs the Bitcoin software. A BTC Node has two main functions:

  1. Validates transactions and blocks
  2. Relays valid transactions and blocks to other nodes

Nodes connect to the Bitcoin peer-to-peer network to download and store the entire blockchain, which is a record of every Bitcoin transaction ever made. Here’s a quick overview of how nodes work:

  • A node receives information about new blocks and transactions from the network.
  • The node independently verifies the transactions to ensure they follow the consensus rules and are not fraudulent.
  • Valid transactions and blocks are added to the node’s copy of the blockchain.
  • The node relays the verified information to its peers across the network.

This full validation and relaying of transactions is critical to Bitcoin’s function as a decentralized payment system. The network’s consensus emerges from all nodes agreeing on the validity of transactions and blocks and therefore blocking any transaction that does not comply with the consensus rules.

Differences between Bitcoin miners and Bitcoin nodes:

Some people get really confused about the difference between a bitcoin miner and a node, which is significant and I think it is important to make it clear just in case.

The main function of a Bitcoin miner is to validate and batch transactions into blocks and publish them to the blockchain. Miners use specialized hardware to solve complex math puzzles and process transactions into blocks. Successfully mining a block is rewarded with bitcoin.

In contrast, a Bitcoin node simply relays transactions to other nodes, validates incoming blocks and transactions, and maintains a copy of the entire blockchain. They support the network infrastructure.

Very important – Nodes DO NOT mine or process transaction into blocks. They just verify!

So, to summarize things:

  • Miners create new blocks through mining, nodes do not mine.
  • Miners compete for block rewards, nodes do not get rewards.
  • Miners require powerful hardware to mine, nodes can run on basic hardware.
  • Mining centralizes if too few miners, running a node decentralizes.

Both the miners and the nodes secure the network. One by mining and the other by participating and both are equally important to Bitcoin as a whole.

Why Nodes matter and why are they important for the bitcoin blockchain?

Bitcoin nodes are the backbone of the Bitcoin network – they are the infrastructure that keeps everything running. At first glance, running a node may seem like an altruistic act that doesn’t provide much benefit to the individual. But in fact, nodes offer several key advantages that are critical for Bitcoin’s overall functionality and health. Below are the top reasons why nodes matter.

Decentralization – Bitcoin is designed to be a decentralized system with no single point of control or failure. By running their own nodes, users can reduce reliance on centralized entities and help maintain Bitcoin’s decentralized properties. More nodes equals more decentralization and greater network resilience.

Validation – Full nodes independently validate all transactions and blocks on the blockchain, ensuring that consensus rules are being followed. This prevents fraud or invalid data from being accepted. Nodes therefore act as gatekeepers that allow the Bitcoin network to remain trustless and secure.

Historical Records – Nodes store the entire transaction history of the Bitcoin network, providing a backup of blockchain data. If some nodes were to go offline, the network can recover as long as enough other nodes persist with the full blockchain records. This preserves Bitcoin’s historical continuity.

Anonymity – Using your own node avoids disclosing personal transaction details to third-party blockchain services. Nodes increase privacy and reduce exposure of one’s wallet addresses and activity on the network.

Participation – Running a node is the best way to fully engage with the Bitcoin protocol, review source code, and signalacceptance of protocol changes. Nodes give their owners a voice and direct participation in Bitcoin’s governance.

By providing infrastructure, security, records, anonymity and participation, bitcoin nodes enable Bitcoin to remain robust and decentralized. They are the active components that power Bitcoin’s peer-to-peer backbone.

Why you should run a Bitcoin node?

There could be a simple one word answer to that question and it is – PRIVACY

Every time you make a Bitcoin transaction, you are trusting someone else’s node in the network to know how many bitcoin you hold and to validate your transaction.

If you run your own Bitcoin node, you can connect it to your bitcoin wallet. This way the third-party trust factor disappears completely, increasing your privacy. All the information stays between you and the network, reducing exposure of any sensitive financial data, that you dont want to be public.

The other benefit is that most options gives you the opportunity to run a lightning node and interact with the lightning network.

Running your own node also gives you a bit deeper look (depending on how far you want to go) into the Bitcoin network, which can help you gain some valuable technical knowledge as well.

Helping to secure and support the bitcoin network is another thing that benefits not only you but the broader ecosystem in general. The more bitcoin nodes there are, the more decentraliede and resilient the network becomes.

Running a full node

Most novice people think of it being way too hard and requiring technical knowledge to set up a new node. However, this is far from the truth in today’s world.

There are a lot of option for both technical and non-technical person and we are going to explore different ways to do so.

Nodes are made to run 24/7, so there are some energy costs, but given that most setups run on a single board computers like Raspberry Pi, the cost is basically non-existend. You have to also make sure that your internet connection is stable as you need it to run your node.

You will also need some storage to store the full copy of the bitcoin blockchain. As of time of writing this, the size of the BTC blockchain is between 800-900GB, so you need at least 1TB of harddrive space, but we recommend going for 2TB so you are not going to worry for a while.

Some nodes offer a “Prune” option. Pruned nodes do not store the full blockchain ledger and history. Instead, it only keeps a portion of the most recent blockchain data. The benefits are that, pruning enables more users to run nodes without massive storage needs. The tradeoff is that these nodes will not be able to serve old blockchain data to newer nodes syncing with the network.

So, lets get to the different options out there:

1. Bitcoin Core

Bitcoin Core software can be downloaded from their official website: bitcoincore.org

It is basically a software that you download and install on your computer. (they do support Windows/Linux/Mac)

Once you download and install Bitcoin Core, you then let it sync fully with the network. This may take a while as it downloads the entire blockchain from its inception. Once the syncing is done, you are good to go.

2. Plug and play options:

Plug and play means that these are pre build dedicated node boxes that you just plug and are ready to roll.

Some of the more popular once include:

myNode one

RaspiBlitz

Start9 Server

3. DIY or Do It Yourself nodes:

RoninDojo

MyNode

Start9 Server

Umbrel

As you can see, most of these options have both build-in setups, but they also gives you the option to build it yourself if you wish to do so.

We just listed the most popular ones, but they are not the only options out there.

Conclusion:

We hope this article gives you basic understanding of what a bitcoin node is, why it is important to the network, and why you should absolutely consider running one.

Even though a lot of people think it requires technical knowledge to be a node operator, this article clearly shows that is not the case and everyone can run a node, no matter his/her’s technical abilities.

We really hope that more and more people will run bitcoin nodes as part of their aim to become more private and keep their sensitive data for themselves. It is our personal life and we should absolutely have the right to remain private if we wish to do so.

Gianluca Lombardi

Gianluca is the editor-in-chief of this site. A finance graduate, he is an active trader who has tested all trading platforms and knows all their secrets. Technology is his passion; he spends much of his free time in the metaverse. Gianluca loves learning new things, researching, discussing and writing about technology, especially when it comes to cryptocurrency and blockchain technology.