A node is a point in a network that either distributes data to other nodes in the network or is an endpoint of a network. A typical blockchain node may be interconnected to several other nodes in a network.
In a blockchain, the node is usually a device such as a computer, laptop or server. Blockchain nodes can perform a lot of different functions, such as validating or rejecting a block of transactions. A node can also save and store the transaction history inside a block. Similarly, it can distribute the transaction history to other nodes for safekeeping and future reference.
But what exactly is blockchain?
How Does Blockchain Work?
Blockchain is essentially a digital ledger of transactions and the technology has become immensely popular because it is thought to be tamperproof. Besides offering a secure environment for financial transactions, a blockchain network is self-regulating, which prevents unauthorized intervention and manipulation.
Whenever a transaction takes place on a blockchain, the record of the transaction is recorded and distributed to every node in the network. The transaction is recorded on a block. A block can contain records of millions of different financial transactions.
Since a copy of the financial record is distributed to every node in a network, it’s almost impossible to manipulate the record of a financial transaction. This is because the person attempting the manipulation would need to change the record kept across thousands of nodes. In theory, the system will catch any manipulation because the unauthorized change will not correspond to the record kept across the network.
How Does a Financial Transaction Get Recorded in a Blockchain Network?
Due to the decentralized nature of a blockchain network, the system automatically authenticates a financial transaction. In the first step, the transaction is authenticated by the user, who employs a private and public key to access the network. In the second step, a block is created, representing the transaction. Subsequently, the record of the transaction is sent to every blockchain node in the network.
Once the transaction is agreed upon between the user, the node will validate the transaction. If a majority of nodes validate the transaction, it is added to the existing blockchain. Any updates are also distributed across the network, which completes the transaction cycle.
Why Do We Need Blockchain Nodes?
A blockchain node is a device on a blockchain network, which keeps a copy of the transaction on the network and may perform essential functions such as validating and authenticating a transaction.
Based on the specific role of a blockchain node, it can:
- Accept or reject a transaction.
- Validate and manage a transaction.
- Store and encrypt information in a block.
- Connect with other nodes by acting as a point of communication.
The role of a specific type of node may differ from that of another node. For instance, certain nodes are programmed to validate a transaction, while other nodes are only responsible for recording the transaction. Sometimes, a node also shares the data with other nodes.
Nodes are also classified based on their availability. An “online node” is one that continuously sends updates to the network. It is always active. In contrast, an “offline node” is not always connected to the network. When connected, these offline nodes are required to download and update a copy of the ledger in order to remain in sync with the network.
It’s also important to remember that each node has a unique identifier attached to its device. This unique ID allows users to identify a specific node in a network. As keepers of records, nodes ensure that everyone can access a transaction record without any type of restriction. Users can easily track a transaction on the blockchain using its ID.
Overall, nodes are critical to a blockchain network because without them the blockchain would cease to exist.
How Nodes Help Secure a Blockchain
Nodes help secure the blockchain by keeping the record in sync with the latest transactions. Due to a large number of nodes, it’s practically impossible for a hacker to make changes and remain undetected. The data is secure because a hacker cannot delete data copied across thousands of different nodes.
Power outages, hacks, and system crashes do not pose a threat because the data is not limited to any single node. In case of a problem, the availability of other nodes ensures that the network continues to operate as normal and users can access the required resources.
The blockchain network can also sustain itself in a global crisis. In fact, you only need one node to keep an entire blockchain operational. Even if every single node goes offline, you will need only one node to restore the entire network. From an operational perspective, nodes are the backbone of blockchain. Without a node, the network will not survive.
What Are the Types of Nodes on a Blockchain?
Blockchain networks may contain various types of nodes. These include full nodes, light nodes, supernodes and lightning nodes. (You will also come across other nodes, such as VeChain authority nodes, master nodes, pruned nodes and mining nodes.)
Here is a brief overview of some of the most important types of nodes:
A full node contains the complete history and information pertaining to every block since the first transaction took place on the platform. Full nodes form the backbone of a blockchain because they’re vital to completing the transaction. Whenever a transaction is initiated, every single node on the entire blockchain verifies and authenticates the block.
Needless to say, there is a lot of data on these nodes. To continually process such a vast amount of data, the node requires immense computing power. At any given time, a blockchain ecosystem may have thousands of full nodes working in tandem. A full node usually has specific responsibilities that make them different from other nodes on the network.
One of their distinguishing features is validating the signature in each block transaction. To authenticate a transaction, the node verifies a digital signature. The digital signature is usually the private key used by the sender.
They also have the authority to accept or reject new blocks and transactions. There can be more than one reason to reject a transaction. Blocks that are incorrectly formatted will be rejected. Likewise, duplicate entries and manipulation in records are other reasons for rejection.
Running these nodes allows users to validate incoming transactions without waiting for others to validate them. In some cases, users validating incoming transactions are rewarded for their efforts.
As the name suggests, light nodes contain light or limited information. Instead of storing complete information, a light node contains information related to a particular previous block to which it’s connected. The information is stored in a block header.
Unlike some other nodes, light nodes don’t need to run continuously. They are usually pieces of software that connect to full nodes to access the blockchain when required. In fact, light nodes use full nodes as intermediaries to access the network. They also use full nodes to get information, such as the account balance and requesting the latest headers.
Due to their lightweight operations, these nodes don’t require a lot of storage and resources to run. You can run a light node on your mobile, because 100MB of storage space with low computational power is enough to justify its operations. Most light nodes can sync with the network in a matter of seconds.
Supernodes connect full nodes and help spread information across the network to ensure that everyone has accurate data. Supernodes handle off-chain functionality. They offer validation, authorization, gateway services and support. Besides their normal operations, they also facilitate voting events, compliance with blockchain laws and execution of protocol events.
Supernodes are generally always online. Unlike other nodes, they also require much more power and resources to run. Running a master node means that you have to deal with maintenance, electricity, storage space and memory. As a result of all this overhead, operators of supernodes are compensated in the form of tokens and coins.
Not everyone can run a supernode. Running a supernode requires an upfront investment in equipment and the provision of collateral in the form of cryptocurrency. The security deposit receives interest, but the collateral may be confiscated if you violate the rules of the blockchain.
A lightning node is a node on a lightning network. There are a few critical differences between traditional nodes and lightning nodes. Instead of verifying each transaction on the network, the lightning node validates the transaction by directly interacting with it.
Lightning nodes can also interact with other nodes on the peer-to-peer (P2P) network. The main function of this node is to exchange money with other lightning nodes.
What Are Mining Nodes?
Every transaction is added to the blockchain by a miner. Miners are also known as mining nodes. Every node on a blockchain has the option to become a miner.
There is a huge incentive to become a miner, by adding and verifying transactions in a blockchain. For instance, any node that adds a transaction to the Bitcoin blockchain is rewarded with 6.25 bitcoins, valued at approximately $300,000 based on the Bitcoin rate of $48,000.
Due to this potentially lucrative opportunity, many miners want to add a transaction. Therefore, Bitcoin blockchain software offers a mathematical puzzle for every mining node to solve. Whoever solves the puzzle gets the opportunity to add the transaction.
Of course, it’s not quite that simple. But this example should provide you an overview of what mining nodes are, and why miners spend considerable time and energy to add transactions to the blockchain. It’s also important to remember that mining rewards differ, depending on the type of blockchain platform.
Bitcoin Nodes vs. Ethereum Nodes vs. Cardano Nodes
A Bitcoin node is a part of the Bitcoin network. According to recent data, there are more than 11,500 Bitcoin nodes — and the number is increasing every month.
It’s important to note that there is no definitive method of counting the exact number of Bitcoin nodes, because many nodes are inactive, and a lot of these operate privately. Running a Bitcoin node can enhance security and bolster privacy.
Ethereum nodes are very similar to Bitcoin nodes. Experts estimate that the number of Ethereum nodes has exceeded that of Bitcoin nodes. Running an Ethereum node requires certain administrative skills.
You can run the node in fast, full or light mode. To run an Ethereum client on HDD (hard disk drive), you must have at least 8MB bandwidth, 4GB RAM and a CPU with 2 cores. By comparison, you may need less power to run a full Bitcoin node.
Cardano nodes are also gaining in popularity. These are the top-level nodes that underpin the Cardano network, whose topology is slightly different from Ethereum and Bitcoin because it doesn’t store a copy of transactions on each node. Instead, the system appoints a leader among a collection of nodes, which ultimately verifies and validates a transaction.
How to Run a Node
As you may have already guessed, running a node on different platforms has different procedures and system requirements. To make things easier, here’s a brief overview of how to run a node on one of the most popular blockchain networks, Bitcoin. This example will give you some idea of how the node is run on such platforms.
To run a Bitcoin node, you’ll need a laptop or desktop that is running a recent version of Windows, Mac OS X or Linux. The computer must have at least 2 GB of free disk space and 2 GB RAM. The system should have access to a broadband Internet connection with a speed of at least 400KB. In addition, you should let your node run at least six hours per day.
You can run the Bitcoin Core on your local machine that has the minimum requirements specified above. To do this, you’ll need to configure the Bitcoin Core client. It can take some days to sync with the blockchain.
Another option is to run the node in the cloud. After setting up an account with Google Cloud or AWS, download the Bitcoin Core and configure the port setting on your computer. There are various other methods to run a Bitcoin node, such as pre-configuring Bitcoin nodes that you can connect to your computer.
What Is a Blockchain Node Provider?
You can install the node yourself but technical difficulties can hamper your progress. One way to solve the problem is by getting assistance from a blockchain node provider. These blockchain-as-a-service companies offer the necessary infrastructure, resources and technology to run your node across a variety of platforms.
The provider handles all the responsibilities of the node. Based on your requirements, you can select a network of your choice to run a node.
When selecting a blockchain node provider, it’s necessary to consider the price of outsourcing the operation of a node compared to doing it yourself. You should ensure that the provider offers some kind of security guarantee — because a lapse in security can have serious financial consequences. Also, pay attention to the track record of the node provider and make sure that the service nicely integrates with your product.
The Bottom Line
Running a blockchain node is perhaps the only way to ensure that you have full control of your node and that you’re following the blockchain rules.
While running a node, it’s easy to create and broadcast transactions without compromising private information. Users can also improve security by keeping their private keys separated from external connections. Beginners and people new to running a node can choose a blockchain node provider to ensure that the entire process is user-friendly and less time-consuming.