How Nodes Work on the Blockchain

If you have done any amount of research on cryptocurrencies or blockchain technology, then you have probably heard of nodes somewhere along the way. Nodes are essential for maintaining the integrity of a blockchain. Simply put, a node is just a copy of the blockchain that exists on a computer or other type of hardware device.

Nodes are basically replicas of ledgers which people rely on to keep track of cryptocurrency transactions that have occurred on the blockchain. Anyone who wishes to can create a node can do so, and will have their own copy of the full blockchain transaction history for any specific cryptocurrency, or for a number of different ones. However, nodes take a lot of memory to run because blockchains can contain an extensive amount of data. For this reason, anyone who wants to create nodes has to be prepared to handle all of this data.

Full nodes vs. Lightweight (Light) Nodes

A full node is a complete list of every single transaction that has occurred on a blockchain. A light node, is only a partial list. For example, a full Bitcoin node would have every single block that has ever been created on the Bitcoin network from 2009, all the way to now. A light node may only have blocks that were created in the past month, or potentially even less.

Despite the fact that light nodes only contain partial blockchain histories, they are typically linked to full nodes in one way or another. This helps to make sure that they remain accurate, and that they can be used effectively.

What is the Purpose of Nodes?

The purpose of nodes is to preserve the integrity of the blockchain for a particular cryptocurrency. An entire blockchain history can be preserved even if there is just one node running it, anywhere in the world. This makes cryptocurrencies that run on blockchains extremely resilient to things like hacks, power failures, or systemic crashes.

Despite the fact that it only takes one node to preserve a blockchain transaction history, blockchain-based cryptocurrencies typically have hundreds, thousands or even tens of thousands of nodes running at any given time. The more nodes that there are for a cryptocurrency, the safer that cryptocurrency is.

It is highly unlikely that a mega catastrophe could threaten the integrity of the Bitcoin blockchain. Though extremely unlikely, it is still theoretically possible. For example, the only real way that the Bitcoin blockchain would be taken down was if something like a nuclear war occurred, or if electromagnetic pulses were detonated in many different urban and suburban areas at the same time. But all it takes is one computer running a full node to upload a blockchain and get things running again.

Nodes essentially make it impossible for governments, terrorists, or any other group of people to completely shut down a blockchain and erase it. When there are thousands of copies of a blockchain scattered all across the world, trying to delete every single copy is basically pointless; it cannot be done.

Differences Between Running a Full Node and Mining

People who run full nodes typically do not get paid to do so. They simply run the full node because it helps the cryptocurrency preserve its blockchain, and to keep the ledger distributed. Many people who run full nodes are just cryptocurrency enthusiasts who want to make sure that cryptocurrencies run correctly.

Mining is similar to running a full node, however, people who mine Bitcoin or other cryptocurrencies get paid to do this. The difference between running a full node and mining cryptocurrencies is that miners validate cryptocurrency transactions using advanced computing power, and create “blocks” for the blockchain. Blocks are just groups of transactions that have all been validated. Miners are rewarded in the form of receiving cryptocurrency payments for the services they provide. They can either be given new cryptocurrency units, or be paid transaction fees by the people making the transactions.

Mining can be very profitable for people who are tech savvy and who have the right equipment and knowledge. Miners typically run full nodes as a part of their mining set ups. So, miners often partake in both mining and running nodes. Not all people who run full nodes also mine.

How Cryptocurrencies Would Work Without Nodes

If every node in existence simply stopped, disappeared or was deleted, then there would be no way to tell exactly who owns which amount of cryptocurrencies and which transactions have occurred. There would be no way to know if cryptocurrencies were being double spent, and all faith in cryptocurrencies would be lost.

For this reason, it is extremely important that nodes continue to exist. Blockchain technology cannot function if the universal open source ledgers are not maintained and preserved. Without nodes, there are no blockcs, and there is no chain.

Does it Matter How Many Nodes There Are?

Technically, any single full node preserves the full history of the blockchain, and could be used to reload a cryptocurrency network if necessary. However, the more nodes there are, the better. This is because the more nodes there are, the more distributed the network is. Greater blockchain network distribution equates to lower risks of fraud, error, or blockchain destruction.

Bitcoin has an extremely distributed node network. In fact, there are roughly 30,000 full nodes for Bitcoin. These nodes are spread all across the world. Because there are so many nodes, it makes it impossible for people to tamper with the blockchain without it being noticed by all of the other nodes. If there was only one node, or perhaps just a handful, then it would be significantly easier for fraud to be created.

Will People Ever be Paid to Run Nodes on the Blockchain?

It is unlikely that people will ever be paid to run nodes, at least for Bitcoin. This is because so many people do it for free. Running a node is not very difficult, and can be easily done by people who have a small amount of technical ability. Many people also seem to enjoy running nodes, and do it as a sort of hobby. As long as people continue running nodes for free, then is doesn’t seem like there will be a good chance that payment will be provided for running nodes.

There could hypothetically be a situation in the future where a group of node runners unite around a desire to be paid. If enough of these people join the group, and if they form a sort of union, then it is theoretically possible that cryptocurrency protocols could be altered to pay node runners for their services. In this scenario, it would probably take a majority of node runners for each cryptocurrency to do this because it would be a substantial undertaking to unite that many people.

For example, it would require uniting around 15,000 people in different parts of the world in order to get the majority of Bitcoin node runners to form a group. That is a massive undertaking, especially considering that many people run nodes anonymously, and that the cryptocurrency industry in general is one that is geared toward anonymity and privacy.

How to Set up and Run a Full Node

Setting up and running a full Bitcoin node is a lot simpler than many people realize. All that you have to do to set up and run a full node is to download the latest Bitcoin core client version of the full node and run it. Many websites and Bitcoin organizations provide further information about setting up full nodes. It is possible to set up and run full nodes on multiple different operating systems.

Before you download the Bitcoin core client version of the full node, you should be aware that it is roughly 100GB in size. This means that you will need to have a good amount of memory on your computer to be able to run it adequately. In other words, if your computer is jam-packed with selfies and cat videos, then you may want to consider deleting some of those before you start running the Bitcoin full node.

Final Thoughts on Nodes

Nodes are a critical aspect of cryptocurrency protocols. Along with mining, unit quantity caps, and anti-double spending security, nodes are one of the most important features of any cryptocurrency. Both full nodes and light nodes are equally important. Full nodes provide the complete history and preserve it as a failsafe, in case something happens to a cryptocurrency network.

Light nodes are useful for performing other functions that support cryptocurrencies without needing the entire blockchain history. People who maintain nodes, together with people who mine cryptocurrencies provide essential services without which cryptocurrencies would not be able to function properly.

Despite the fact that there are tens of thousands of full node carriers and cryptocurrency miners around the world, this number could soon grow even higher because cryptocurrencies are steadily rising in popularity. In 2017 alone, the price of Bitcoin jumped from roughly $1,000 to $15,000. Other digital currencies like Litecoin and Ethereum, for example, also saw tremendous gains.

If cryptocurrencies continue to make impressive gains like this, then they will most likely continue to grow in popularity and be used by increasing numbers of people. The more numbers of people there are using cryptocurrencies, the more important that it is for there to be more nodes in existence. This is because there will be higher levels of people depending on cryptocurrency protocols to be completely sound.

It is even possible that one day cryptocurrencies could replace, or at least reach parity with fiat currencies in terms of market cap. If this does happen, then network security requirements will reach all-time highs. In such a case, nodes could even hypothetically start being maintained by governments in addition to private citizens. They may even be kept at military bases or in secure locations. Of course, this would require full government support of cryptocurrencies as units of exchange. This could take some time, or may never happen but if it does, it will dramatically increase the importance of nodes.