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What are Blockchain Nodes? A Complete Guide

What are Blockchain Nodes?

In the simplest of terms, a blockchain node is a computer connected to a blockchain network. It is a widely used term even outside of the blockchain since the technical definition is “a point in a network at which lines intersect or branch,” commonly used in a wide variety of telecommunication networks.  

It is a fundamental part of the blockchain since it acts as a decentralized digital ledger, without which no one could access any information, and data could not be stored, verified, or communicated to other nodes. A node can execute certain functions like creating, verifying, receiving, or sending information. What is essentially a device connected to the blockchain, the node is responsible for conveying every piece of information about blockchain transactions and other activity.

This article answers a very important question: what is a blockchain node, and what are its functions? Let’s discuss. 

What is the Importance of Blockchain Nodes?

Importance of Blockchain Nodes
Source: Freepik

The rising popularity of blockchain technology over the last couple of years and its widespread adoption in a variety of industries such as healthcare, energy, entertainment, etc., is only going to continue with the advancement in technology. Therefore, it is important to understand the infrastructure behind blockchain technology to understand the dynamics and utilities that make it superior to its traditional counterparts. 

Nodes are the backbone of a blockchain’s infrastructure. Their main purpose is to enhance the security of the data on the blockchain and prove credibility to the network. There can be thousands of nodes in a blockchain network that ensure its decentralization, immutability, and traceability. 

Nodes help provide reliability by storing all blockchain transactional records. Moreover, nodes can also protect the blockchain from centralized attacks as there is no single point of failure on a blockchain network. Each node has a copy of the blockchain database and uses it to verify transactions and add them to the blockchain as blocks. Thus, the wider the node network is, the more trustworthy a blockchain is. 

Nodes have a variety of uses on the blockchain, ranging from managing and recording blockchain transactions to rejecting and storing data as well as maintaining the consensus algorithm. It is also a significant part of a blockchain’s development since a node helps add new blocks and synchronize the complicated network with one another.  Moreover, nodes are also responsible for determining whether a block of transactions or signatures is legitimate or not and subsequently accept or reject it to keep the network running smoothly.

Much like the baseball ground where a game takes place or the track where a motor racing event happens, a node is a crucial and non-disposable aspect of the blockchain layers. Without nodes, a blockchain is simply a database with some crypto hashing.

How do Blockchain Nodes Work?

How do Blockchain Nodes Work
Source: RS online |  visual explanation of what is a node in blockchain in three types of systems

Now that we have discussed what is a blockchain node, it is also essential to understand how nodes work. To do that, it is first necessary to go back to blockchains and understand their functioning. Blockchains are a shared, immutable ledger where each block is cryptographically linked to the next and wherein a change in one part of the blockchain would cause all the subsequent blocks to undergo change. However, they exist on a distributed network and have multiple copies, meaning they are not subject to change. 

Nodes are unique in the sense that each one can be distinguished from the other by a certain characteristic or feature. They can have different functions depending on what the application is. Usually, a node is said to maintain blockchain transaction records, as discussed above, but this is not the function for all the nodes. What the node does depends on the overarching requirements of the blockchain. Each node plays a different role in the blockchain ecosystem, along with the standard duties of managing transactions, sharing the data with other nodes to grow the network, and implementing an algorithm to keep the entire network updated and functioning. For example, Corda has two nodes: one to store information from clients and one to validate the transactions occurring on the blockchain.

Different Types of Blockchain Nodes

Types of Blockchain Nodes
Source: Freepik

The different types of blockchain nodes and their functions for varied blockchain layers are a pivotal part of understanding what is a blockchain node.

1. Full Nodes

The term ‘full node’ is often used interchangeably with the word ‘node,’ but both terms are quite dissimilar in their meanings. Full nodes support and provide security to the network through validating all blocks and blockchain transactions, which is why they are also referred to as ‘fully validating nodes.’ In Bitcoin, a full node is a Bitcoin network computer that performs the primary function of storing and synchronizing the data on a blockchain. 

Full nodes are also essential to making decisions and voting on proposed changes to the blockchain network with respect to the specifications of the network. Only when 51% of all the full nodes are in agreement, a change is made in a blockchain. Additionally, there are quite a few types of full nodes:

i) Pruned Full Nodes

Pruned Full Nodes
Source: Freepik

These nodes take on the responsibility of pruning old blocks of the blockchain and offer a space-saving option to the blockchain layers. Running this node requires downloading the entire blockchain and all the blockchain layers, verifying, and subsequently deleting the blocks with the oldest transactions by date. For example, if there is a 500 MB limit set for the operator and it has to perform a 500 MB transaction, it will be the responsibility of this node to store it.

ii) Archival Full Nodes

These are the backbone of the network since they validate each block and store the entire blockchain history right from the genesis block. They are different from pruned full nodes in terms of memory capacity. They also take on the primary functions of nodes by verifying transactions, communicating about the status of the network to other nodes, validating transactions, and handling consensus.

Authority Nodes:

These types of nodes are generally used in the case of a decentralized network, which distributes information across multiple devices instead of a single central server. They carry out similar functions to other full nodes, such as receiving, storing, and processing data in blockchain transactions. However, an interesting aspect about them is that the number of authority nodes required is set by the development team and then also voted on by the community.

Miner Nodes:

While setting up a new node, miners have to run a full node in order to pick up on authentic transactions. This is due to the fact that a proof-of-work mechanism is being used, and miners are required to have a full node to understand the current status of the blockchain. A miner may work alone (solo miner) or in groups (pool miner) to complete the tasks. While a solo miner uses its own full node, a mining pool has an administrator that is given the responsibility to run a full node.

Masternodes:

These types of nodes authenticate and store blockchain transactions but are not responsible for adding blocks to the blockchain. Through running a masternode, users can share network rewards with others. Masternodes are generally available all the time and are considered more powerful than regular nodes since they have a lot more RAM. Running a masternode is comparable to running a large server on the network, which is why it requires significantly more energy. These nodes can be compensated via interest payments.

Staking Nodes:

Staking is known as the process of temporarily giving up a large number of tokens to the main network as a promise that the node operator will not modify the node to work against the rules of the network. This helps restrict illicit activities, such as stealing funds from users’ accounts, on the blockchain. This process is, however, only available within proof-of-stake mechanisms, a newer model which is much more sustainable than the original proof-of-work model.

2. Lightweight Nodes

These are also known as Simplified Payment Verification (SPV) nodes. Unlike most of the other nodes, they do not store the entire blockchain but instead store their own transactions and limited information about the blockchain, such as the block headers. Lightweight nodes are also not accountable for the security of the blockchain. 

They have an interesting way of functioning since, instead of looking inward, these nodes are reliant on third-party servers to get information about the blockchain network. Thus, lightweight nodes are good for those users who want to transact and trade only a small amount of bitcoins since they are able to verify whether a blockchain transaction is included in a block without having to download the entire blockchain. They are also quite simplistic and can easily function as apps on your devices.

3. Super Nodes

Super nodes, also known as listening nodes, are publicly visible and accessible nodes. Keeping true to the name, listening nodes communicate with any node that establishes a connection with it in the blockchain. It’s pretty easy to spot them since any fully validating node that is not hidden is a listening node. Due to its nature, it typically runs 24/7, delivering blockchain transaction history and data to the multiple nodes connected to it. Their function as a communication bridge means that super nodes are an important aspect of any blockchain they are a part of. They are also used to implement special tasks in blockchains, such as implementing a change in protocol.

4. Lightning Nodes

The functions of lightning nodes are drastically different from those of other nodes. A lightning node is a piece of software connected to the relevant blockchain network as well as the Lightning Network in the case of Bitcoin and is capable of bringing down the load of the blockchain network. They allow for one-off transactions with users that exist outside of the blockchain and are therefore extremely useful in facilitating quicker and cheaper transactions. They were created to sidestep the issue of blockchain congestion, and their unique function makes them an important part of the network.

Conclusion

Blockchain nodes are one of the most integral aspects of the blockchain network, and understanding them is important if you plan on entering the world of crypto and blockchain. As discussed above, there are a wide variety of nodes, and each performs distinct functions to keep the blockchain functioning smoothly. A blockchain architect, UX developer, or someone else more closely aligned with the making and running of the blockchain would require more technical knowledge about setting up and running nodes, but the focus of this article was to provide an outline of what is a blockchain node in order for you to develop a better understanding of the decentralized world and how it is convened over a network of computers. 

Frequently Asked Questions (FAQs)

What is a node in blockchain, in the context of Bitcoin
Source: https://learn.eqonex.com/news/what-bitcoin-node

1. What are the Steps to Set up a Full Node?

Setting up a full node can seem complex, but it is a relatively simple process when broken down into separate steps:

  • Choosing a blockchain to set up and run the node in, such as Bitcoin or Ethereum
  • Acquiring the software and hardware equipment required for deploying a node and subsequently running it, which would differ for every blockchain and cryptocurrency
  • Getting the suitable hardware, which requires a small computer known as Raspberry Pi 
  • Executing the node

2. How to Run a Full Node?

To understand how to run a full node, it is first important to know that full nodes can be hosted on cloud protocols, such as Google Cloud or Amazon Web Services, or on a device with enough RAM and hard disk space to support it. It is also vital to make the most of node solutions by growing from one base.

Once a node has been set up, it is also essential to keep a check by monitoring and maintaining it as and when required to avoid faults in the blockchain. 

3. Is Hosting a Node in the Blockchain Profitable?

A well-maintained node in a blockchain can be profitable and a source of passive income. The node operator can earn coin rewards and benefit from the price appreciation in the future. However, setting up and running a node is also not a cheap process since the equipment is also quite costly. 

Profits also depend on which type of node you are running, with some being more profitable than others. A staking node allows for greater returns, while a masternode would reward you for the service you provide. 

4. How many Nodes can a Machine Run?

The number of nodes a machine is capable of running is completely dependent on the capabilities of the hardware system. On a single machine, you could choose to run a single wallet or increase that number by using virtual machines. However, it is important to ensure not to exceed 85% of the available server resource unit if using a virtual private server since you could run into trouble with your providers.

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