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The increased price of Bitcoin and the bull market is stimulating people’s interest in the cryptocurrency and blockchain industry. Even people who were skeptical about cryptocurrencies in general are starting to invest in them. We will explain why your savings and the blockchain as a whole will not disappear if all the servers are shut down, and why bitcoin is not a bubble that is about to burst. To do this, we will look at how the fundamental element of the blockchain infrastructure – crypto nodes – works: what types of crypto nodes exist, what tasks they perform, and how their role affects the blockchain system as a whole.
What are cryptocurrency nodes. Definition
A crypto-node (or simply node) is a device, usually a computer, connected to a blockchain network that stores a copy of all transaction history on that network and helps verify new transactions and blocks. Nodes are also called “nodes.” Each “node,” or node, can independently verify and store blockchain data. The more nodes, the more resilient the network is to failures and attacks. This architecture ensures the transparency and reliability of the blockchain network, and arguments that cryptocurrency and the blockchain as a whole may disappear if some servers are shut down are untenable, because even if there is one computer with only one node, the blockchain will exist, as it stores all the necessary information. For example, as of December 7, 2024, there are 10928241 Ethereum nodes in the world. The probability that all these nodes will disappear is extremely small.
Functions of crypto nodes in a blockchain network
Data Storage. The main function of nodes in blockchain is to store all information about the funds available in users’ wallets and transactions made in the blockchain network.
Verification and validation of transactions. As soon as someone sends a record to the blockchain network, the node starts verifying it, or rather several checks: signature verification, balance verification, checking the transaction for compliance with the network rules, and double payment verification. If the transaction passes all checks, it is added to the “mempool” where it waits for the queue to be added to a new block.
Decentralization of the network. A huge number of cryptocurrency nodes are raised in the world, each of which contributes to the network. Thanks to this, no one can control the blockchain and can’t put whatever they want into it.
Synchronization of data between network participants. Blockchain synchronization is achieved by connecting nodes to other nodes, during which each node checks the length of the blockchain with other nodes and which block is the last in the chain. If a node finds that its local copy of the blockchain is out of date, it downloads the missing blocks from other nodes.
Types of crypto nodes
There are several types of cryptocurrency nodes depending on what functions they serve.
Full Nodes
Full nodes store the entire history of the blockchain and check transactions and blocks for compliance with the network’s consensus rules. They maximize reliability and security, and can vote on changes to the network. Full nodes typically require significant computational resources, hard disk storage, and a stable Internet connection.
Light Nodes
They work only in connection with full nodes. Light crypto nodes do not contain the entire blockchain, but only the part of the blockchain (block headers) needed to verify and validate transactions. This provides high speed of their work and allows to save disk space, bandwidth, as well as reduces system requirements to the devices where these nodes run.
Miner nodes
A miner node is a full node in a blockchain network that additionally performs the process of mining (mining) new blocks in networks with the Proof-of-Work (PoW) algorithm. For successful hash selection and inclusion of the next block in the chain, the miner receives a reward – block reward and commissions for processed transactions. Miner nodes also provide consensus and security: the more independent miners there are in the network, the more difficult it is to manipulate the network, because in order to crack the blockchain, you need to gain control over at least 51% of cryptocurrency nodes.
Validator Nodes
The main function of these nodes is to verify transactions and their correctness: the node checks whether the sender’s balance is sufficient, whether signatures are correct and whether there is no double spending. In case these rules are not followed, the node can reject the transaction. Also, this type of cryptocurrency node is responsible for supporting the consensus algorithm. Depending on the consensus mechanism (Proof of Work, Proof of Stake, Delegated Proof of Stake, Proof of Authority, etc.), a validation crypto node can make a block of validated transactions or participate in the selection/preparation of a block proposed by another node.
Archive Nodes
This type of cryptocurrency node stores not only the entire history of the blockchain network, starting from the very first block, but also sometimes the intermediate states (e.g. in the Ethereum network) Such a large amount of stored information (sometimes terabytes of data), requires significantly more disk space.
Master Nodes
Master nodes are special nodes that, through collateral and additional services (fast transactions, mixing for privacy, voting, etc.), bring new features to the network and receive economic rewards. They increase the stability, security and functionality of the blockchain and often play a key role in project governance through decentralized voting mechanisms.
How to run your own node
Running your own node gives you complete control and independence as you interact directly with the blockchain. This can serve as an additional source of income, as well as giving you the pleasant realization that you are participating in the decentralization of the network.
Step-by-step guide on how to start a Bitcoin full node
To run bitcoin full node on linux you need to:
1) download the distribution:
https://bitcoin.org/en/download
2) unzip the archive and move the files from the bin folder to /usr/local/bin.
3) Generate authorization credentials:
wget https://raw.githubusercontent.com/bitcoin/bitcoin/master/share/rpcauth/rpcauth.py && chmod +x rpcauth.py
./rpcauth.py <rpc_username>
4) Create a configuration file /etc/bitcoin/bitcoin.conf with the following contents
listen=1
txindex=1
server=1
rpcauth=bitcoin:<hash after running rpcauth.py>
5) run node
bitcoind -daemon -conf=/etc/bitcoin/bitcoin.conf -datadir=/etc/bitcoin/chaindata
7) Check status
bitcoin-cli getblockchaininfo (https://developer.bitcoin.org/reference/rpc/getblockchaininfo.html)
or
tail -f /etc/bitcoin/debug.log