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Bitcoin Nodes: The Key Players on Bitcoin´s Decentralization

We´ve seen many times confusion within the community when discussing concepts such as bitcoin fully validating nodes and their importance for the security of the network. Hence, we have decided to create a guide that discusses the importance of running a Bitcoin node. Let´s get into it!

What is a Bitcoin Node?

A Bitcoin node is a hardware device that shares information about the whole Bitcoin blockchain and the transactions that are processed within the network. Fully validating nodes are connected to the network and they store a full copy of Bitcoin´s blockchain. A Bitcoin node clearly distinguishes Bitcoin transactions that are fraudulent and those that are not.  A node could be compared to how a server on the internet works and they play a very important role. These nodes participate on the Bitcoin network communicating information about both transactions and blocks. 

They verify every single transaction that has been made on the Bitcoin network. Nodes do not trust other nodes. Every single time that a node receives a block of transactions, it checks whether the transactions have been properly processed or not by comparing the information with the copy of the blockchain that it hosts. They make sure that there have been no double-spending. However, it might occur that a node discovers a transaction that has been a double spend. If that happens, the node that sent the incorrect transaction would be isolated, making the Bitcoin network more secure. Nodes that propagate the correct information would be protecting the network from malicious parties. 

There are different types of Bitcoin nodes depending on the needs of the users. Some nodes have a full copy of the blockchain (fully validating nodes), while others do not keep the whole blockchain. Those miners that do not store a full copy of the blockchain are called lightweight nodes.

Bitcoin Node vs Mining

Crypto beginners many times tend to confuse mining pools with nodes.

Bitcoin nodes are in charge of making sure that the Bitcoin transactions are legitimate and correct. They basically make sure that there are no double-spends and that spent BTCs are correctly processed. If they find information that is not correct, they would then isolate the node that sent malicious information. 

On the other hands, miners provide the computing power to process blocks that include transactions to be presented to the fully validating nodes in order to be included on the main chain. Simply put, miners solve a mathematical problem and fully validating nodes make sure that all the consensus rules are indeed respected.

Miners are rewarded with 6.25 BTC each time they include a block on the main chain whereas fully validating nodes are not rewarded. However, having a vast amount of independent fully validating nodes is of utmost importance as they protect the network and its value. An insecure network, has no monetary value and that´s exactly the main reason why fully validating nodes are crucial actors on Bitcoin´s ecosystem.

How to Run a Bitcoin Node?

In order to run a Bitcoin node, you will need at least a Raspberry Pi 4 (recommended) and a 1 TB SSD card (if you want to run a Bitcoin node for several years, 1 TB should last for some time). At the same time, you should purchase an SSD Enclosure to protect the SSD card, you will need a 16GB (or more) micro SD, a power supply, an Ethernet Cable and a case for your Raspberry Pi.

These are all the things you need in order to start participating on the Bitcoin network as a fully validating node. This is the recommended hardware, but you might have some changes. For example, a Raspberry Pi 3 might still work, but it would be much slower than a Raspberry Pi 4. 

Raspberry Pi

As we mentioned before, using a Raspberry Pi 4 is the ideal setup. The whole process will be easier if you use a Raspberry Pi 4 rather than a Raspberry 3 or similar. Although both of them could support the whole operation, the better the setup, the easier it would be for you to run your node and make it as efficient as possible. 

Considering the node will be running on a 24/7 basis, you should also think about purchasing some coolers that would make your Raspberry Pi 4 / 3 reduce their heat and work properly. If your device heats for long periods of time, this could be definitely negative for your whole node.  There are some coolers you can buy that would make it cooler. The better the cooling system, the better your Raspberry Pi will work. 

Another good practice to protect your Bitcoin node and the whole operation is related to the case you select for your Raspberry Pi. Remember, this is the most important component of your node and you want to make sure that it works efficiently and that it is protected against any possible hazards.

This is the main reason why you should buy a Raspberry Pi case for your device. It makes sure the system is protected from possible accidents and it could also make your Raspberry Pi look better than without one.  Although the Raspberry Pi case is not a key element, it is definitely going to improve your performance. As long as you keep it cooled and protected, the longevity of the device will be longer. 

Why is Running a Bitcoin Node Important?

There are many benefits of running a Bitcoin node as a user of this network. For example, if you received some BTC, you want to check how many times it has been processed by the network. You can easily do so by relying on third-party services that are called blockchain explorers that would allow you to do so. On in this case, you are relying on services from third parties rather than on your node.

When you run your own node, you can easily check this information yourself. Another benefit of running a fully validating node on the Bitcoin blockchain is related to the fact that you are providing decentralization to the Bitcoin network. When you run your own node, you make it possible for the Bitcoin network to become more decentralized, which is of paramount importance.

Furthermore, running a full Bitcoin node would also give you the expertise and knowledge you need in order to better understand how the Bitcoin network works. Running a Bitcoin node is almost a must-to for Bitcoin supporters nowadays.

 

Decentralization

When we talk about nodes, we also talk about Bitcoin network decentralization and how you can literally become the owner of your money. When we use a cryptocurrency wallet, we rely on their servers and their own nodes. Basically, we are trusting them and the information they provide. 

If we want the ultimate level of decentralization, the best thing we can do is running a Bitcoin node that would allow us to be in control of our money. We do not need to depend on a third-party service provider in order to interact with the Bitcoin network. The information is verified by our own Bitcoin node rather than by another company. 

Those users that want to send and receive Bitcoin, that want to analyze blockchain statistics and that want to make sure that they interact with the Bitcoin consensus they are comfortable with, should run their own nodes.  With more nodes running, the Bitcoin network becomes more decentralized, which is better for both companies and individuals. You can check and validate transactions, you can make sure the information provided by third parties is correct and you can also interact with the whole Bitcoin network. 

Running a Bitcoin node makes it possible for you to become your own central bank. That means that you are part of the Bitcoin blockchain and you decide what is valid or not with your node and with the interaction with other network participants. Miners add transactions into blocks but the transactions are validated by the nodes that make sure each transfer follows the Bitcoin network rules.