The Bitcoin network depends on miners and nodes. These nodes play a very important role in the operation of the blockchain. In this article, we will explain as simply as possible what a Bitcoin node is and how it works.
What does a Bitcoin node do?
Put simply, the short explanation is that a node is a computer that connects to other computers. This group of computers share information and follow specific rules.
In Bitcoin, these shared rules are established in the Bitcoin protocol. The nodes in this peer-to-peer network are essential to keep the blockchain running. This makes them indispensable for Bitcoin.
It is also possible to run a node completely shielded. As a result, it is not possible to determine with certainty how many nodes there are, but it is generally estimated that there are several tens of thousands of nodes.
There are different types of nodes, including full nodes and light nodes. The full node is a computer that synchronizes a copy of the entire Bitcoin blockchain. The full nodes validate transactions and blocks from each other. They confirm transactions by looking at their copy of the blockchain and passing it on to the rest of the network.
Running a full node is expensive and cannot be done on just any computer or phone. A smartphone would have to have hundreds of gigabytes of free space to run software with a full node. That's why a lighter version came along: the light node.
A light node does not have a full copy of the blockchain. Instead, they only download so-called block headers, which take up a lot less space. This makes running a light node feasible for more computers and phones, and also a lot less expensive.
So why not just have light nodes? Light nodes remain dependent on full nodes and must eventually connect to a public server or a specific full node.
Nodes and miners
Miners also run nodes in the Bitcoin network. Their nodes have different functions. They do not validate the blocks and transactions of the blockchain but add entire new blocks.
To add a new block, the miners (which are basically hyper-intelligent computers) have to solve a puzzle. After this, the rest of the network validates the new block and it becomes part of the blockchain.
If the miner successfully adds a new block, it receives a reward in BTC.
Another type of Bitcoin node is a lightning node, which interacts with the peer-to-peer Bitcoin Lightning network. Of course, there are other cryptocurrencies, which are based on other technologies. For each cryptocurrency, different nodes may be used. Some well-known nodes include master nodes and staking nodes.
Nodes in the Netherlands versus other countries
Interestingly, of the 140 countries in which Bitcoin nodes are active, the Netherlands holds the 6th spot in the ranking of most active nodes. With that, according to the November 30, 2023 census, about 3.76% of all nodes are in the Netherlands. Most of them are based in the United States, followed at a great distance by our eastern neighbors, in Germany.
Especially given the population size in the Netherlands, it is an achievement of stature.
How can I run a node?
Nowadays it is not too difficult to run a full node yourself. There are complete packages available for download, for example from Umbrel. You also need a Raspberry Pi (a kind of minicomputer) and a hard disk. Some prior technical knowledge is required.
It is also possible to download software from bitcoin.org. Do note all the requirements around computer processing power and memory. There is a complete roadmap on their website if you would like to run a node.
Should I run a node?
There are enough nodes active to keep the Bitcoin network running. So there is no need to run a node yourself to support the blockchain. There is also no monetary reward for running a node.
So what are the benefits of running a node? It can be a way to interact with the blockchain with more privacy.
However, it is very technical and much less user-friendly than sending transactions using third-party specialized in trading, sending, and storing crypto, such as Blockrise.
The information provided in our articles is intended solely for general informational purposes and does not constitute (financial) advice.