Bitcoin Node Explained

A Bitcoin node is a critical building block that helps make up the larger Bitcoin network. However, just like all squares are rectangles, not all rectangles are squares, a BTC node can take on different forms, often leading to confusion or misunderstandings for new Bitcoin users.

Read on to learn how Bitcoin full nodes and miners vary in their functions and the specific roles they play in processing your transactions.

What is a Bitcoin Node?

Bitcoin’s decentralized network operates on the concept of verification instead of trust. For an autonomous payment system’s transaction to be valid, specific devices are required to keep an eye on all transactions. These are the Bitcoin network nodes, physical computers that run Bitcoin software. Their job is to validate transactions, update the blockchain and keep a history of all previous transactions.

Having a network of independent nodes to verify transactions is a key component in overcoming the double spend issue that makes running a digital currency so challenging. Only after a significant number of nodes agree on the validity of transactions, do they achieve consensus and timestamp the activity on the blockchain.

A BTC node is free to download the latest Bitcoin software, join the network and synchronize itself to the latest copy of the blockchain’s transaction history.

Bitcoin Full Nodes

A Bitcoin transaction’s inclusion on the blockchain starts and ends with a Bitcoin node. Once a user signs a payment in their wallet, the transaction is sent out to the network where a specific type of BTC node will pick it up: a full node. Full nodes are considered “full” because they store a complete copy of all previous transactions.

Should the payment meet the requirements as set forth in the Bitcoin protocol, the full node proceeds to broadcast it to the network’s other nodes, which independently verify the transaction’s validity. Eventually, this transaction is added to the Bitcoin mempool, along with all the other transactions in line to be processed.

Bitcoin Mining Nodes

Now the work gets passed over to Bitcoin mining nodes. A miner is a different type of Bitcoin node and serves an entirely different purpose. Miners participate in a resource intensive competition that involves solving a complex mathematical puzzle. This forms the basis for Bitcoin’s proof-of-work consensus mechanism. The winning miner gets the honor of grouping pending transactions into a block and broadcasts the proposed block back to the network.

Mining is an expensive endeavor, but owners of the mining equipment are incentivized by the possibility of earning transaction fees and of course, new bitcoin. Misbehaving miners will not only miss out on these rewards, but also stand to lose lots of time and energy in doing so.

Completing the Circle

The transaction process now returns to the full nodes, who independently verify the new block and add it to their own copy of the blockchain. Numerous nodes enact the same procedure until consensus is achieved regarding the validity of the block and its respective transactions. These transactions are now timestamped on the distributed ledger, and after a few network confirmations, can be considered a permanent entry on the Bitcoin blockchain.

Full nodes can now return to sniffing out new transactions, while miners can continue participating in further puzzle solving.

Key Differences Between Full Nodes and Miners

Considering that a BTC node can take on different roles, it’s important to understand the features that distinguish between full nodes and miners.

Most importantly, full nodes are not rewarded with bitcoin for their efforts, unlike miners. However, one could argue that users are incentivized to run full nodes in order to maintain the integrity of the ecosystem that stores their wealth.

Additionally, hardware specifications vary drastically between the two node types. Bitcoin’s difficulty adjustment has risen exponentially over the years, requiring expensive, dedicated hardware to crack the mining puzzles. This is in stark contrast to running a full node, which can usually be done on simple household computers.

What About Light Nodes?

The amount of memory required to host the entire Bitcoin blockchain increases block by block. This is not something that you want to, or need to, carry around in your back pocket.

Most mobile phone wallets do indeed act as nodes on the network, but they operate on a trimmed down version of the blockchain. These so-called light nodes act as satellites to full nodes, as they cannot independently verify transactions. Nevertheless, light nodes serve as a perfect mechanism to interact with the Bitcoin network while you’re on the go.

In Summary

Operating a bitcoin mining rig is not feasible for most people but running a full node can be within grasp if you’re willing to do the extra research. A light wallet may be enough for the average bitcoiner, but taking the effort to host your own Bitcoin node is a considerable step towards achieving self-sovereignty and maintaining privacy.

bitcoin.org offers additional tutorials to help get your BTC node up and running. As always on the internet, be aware of imposter website links and make sure to download the Bitcoin Core software from the correct source: https://bitcoincore.org/en/download/