The value of cryptocurrency is only as secure its network. That's where nodes come in. As SCV has gotten further into bitcoin and privacy investing, we often find ourselves talking about nodes, but never quite feel like our answers make sense. We took some time to really try and dissect their role and importance so that we can better explain them in a way that everyone can understand.
What is a node?
Essentially, a node is a computer connected to other computers that follows rules and shares information. They are essential for keeping the Bitcoin network running. They act as a sort of guardian that constantly monitors the Bitcoin blockchain to distinguish legitimate Bitcoin transactions from illegitimate ones. Their most basic purpose is to prevent attempts to double spend bitcoins that have already been spent.
In short, a node's job is to:
- Follow rules
- Share information
- Keep a copy of confirmed transactions (these confirmed transactions are held together in a file called the blockchain)
Why should I get a node?
First off, setting up and running a Bitcoin node is actually relatively simple. Running a node will allow you to interact with the bitcoin network more privately and securely. In addition, it enables a user to prove ownership of their bitcoin without relying on third parties. While running a node helps strengthen the Bitcoin network, it is most beneficial to you for it allows you to preserve your privacy, bolster your own security, as well as prove that no one is manipulating the network.
Okay, but tell me more. Why is it important to run a node?
In short, you can:
1. Protect your Bitcoin investment
2. Preserve your privacy
3. Make the Bitcoin network more robust
Due to its decentralized nature, there is no one single entity capable of controlling or manipulating Bitcoin. Nodes are the answer to maintaining Bitcoin's integrity and maintaining an increased level of security. More Bitcoin nodes mean a more redundant, more stable, and more decentralized network.
By running your own node, you can create and broadcast transactions directly from it, meaning you can avoid using outside services that risk compromising private information. This in turn improves your security by reducing, or altogether eliminating, any need to expose your private keys to the internet.
When you transact over the network without using your own node, you are placing your trust in other people. In order to be fully in control and maintain transactional privacy, you'll need to run your own node so you can verify and process payments without having to rely on anyone else.
What's the difference between at Full Node and a Lightweight Node?
Good question! Node and full node are often used interchangeably, but that's a mistake only a newb would make (and, like us, you're trying to graduate from newb). A full node confirms transactions by downloading all transactions, while lightweight nodes only download key data. Lightweight nodes depend on full nodes to function and require less download/storage capacity because they don't store the entire block chain.
Is it hard to set up?
Not really! There are certain requirements that need to be met, and while you can run a node on weak hardware, it'll likely cause you more trouble than necessary.
There are three methods you can use to set up your full node:
1. Cloud: you will need to be set up on AWS or Google Cloud, as well as create a virtual machine (VM) to speed up the connection. Don't forget to download Bitcoin Core, the software required to run bitcoin and configure everything to the cloud.
2. Local: this method requires running Bitcoin Core on your machine. This requires a min of 350G of disk space, 2G of RAM, as well as high speed internet.
3. Pre-Configured: aka "node-in-a-box" that can be hooked up to your computer. This requires the least amount of work for the user.
There are several existing companies (i.e. Voltage) that are equipped to help you begin to run your node. For those who want to save on time and stress in this process, this is our recommendation, although these devices do not come free.
Do I need to have a node to use bitcoin?
Technically no! A huge part of bitcoin is being able to send, receive, and store money without relying on anyone else. By not running your own node, you miss out on the opportunity to ensure that you and only you own the bitcoin. If you value privacy above all else, then it's in your best interest to learn the ropes. However, if you don't mind trusting another to handle your transactions and prefer a simpler process that doesn't require setting up and maintaining a computer, you can opt for a bitcoin wallet or a "block explorer".
Running a node will not only help provide redundancy & availability of the bitcoin network, but also protect you as well as provide you more of a say in its future.
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