What is a blockchain node: the technology powering decentralized networks

What makes blockchain networks secure and decentralized? Blockchain nodes are the answer. The technology validates transactions, stores the blockchain, and keeps the network running. Whether you’re new to blockchain or looking to deepen your understanding, grasping what a node does and why it’s vital is the first step to understanding how decentralized networks operate.

This guide is here to help. Read on to understand what blockchain nodes are, the different types in use today, and how to set up a blockchain node.

TL;DR

• Nodes validate transactions by checking authenticity, funds, and preventing double-spending.

• Full nodes store the whole blockchain, ensuring data integrity and decentralization.

• The different types of nodes include full, light, mining, and staking nodes, each with a specific role.

• Nodes protect the network by sharing copies of the blockchain. This makes it hard to attack or censor the network.

• Trust and responsibility are spread across all nodes, avoiding centralized control.

What is a blockchain node?

A blockchain node is a fundamental part of a decentralized network, serving as a connection point that can receive, store, and transmit data. Nodes are important for validating transactions, maintaining a copy of the blockchain, and preserving the network’s security and decentralization. Let's take a closer look at the general role of nodes.

Transaction validation

Nodes check if transactions are real by confirming that the sender has enough funds, and that the transaction follows the network’s rules. This process prevents issues like double-spending.

Maintaining the blockchain

Each node stores a copy of the entire blockchain, which is a ledger of all transactions ever processed on the network. This redundancy helps to guarantee data integrity and availability.

Security and decentralization

By distributing copies of the blockchain across numerous nodes, the network becomes resistant to attacks and censorship. No single entity controls the blockchain, which aligns with the principles of decentralization.

Decentralization and trust distribution

Within a decentralized network, trust is distributed across all participating nodes rather than being concentrated in a central authority. This structure improves security and resilience, as the network can continue to operate even if some nodes fail or act maliciously. The different ways blockchains reach agreement on their state helps to make sure all nodes agree, keeping things consistent and trustworthy.

Understanding the function and importance of blockchain nodes is essential for grasping how decentralized networks operate and maintain their integrity. By validating transactions, maintaining the blockchain, and distributing trust, nodes form the backbone of blockchain infrastructure.

How does a node work?

Now that we understand what nodes are designed for, how does the technology work?

Receiving transactions

When you start a transaction, it’s sent to the network. Nodes receive these transactions and temporarily store them in a pool of pending transactions, often called the “mempool.”

Transaction validation

Nodes validate each transaction by checking the following:

• Signature authenticity: This step makes sure the transaction is signed by the rightful owner.

• Sufficient funds: Confirms the sender has enough balance to complete the transaction.

• Double-spending prevention: This verifys that the same funds haven’t been spent elsewhere.

Broadcasting transactions

After validation, nodes broadcast the valid transactions to their peers. This makes sure the entire network can record the new transactions. Only valid transactions are shared with other nodes, protecting the network's integrity.

Consensus mechanisms

Nodes use consensus mechanisms to reach a mutual understanding of the blockchain’s status.

• Proof of Work (PoW): Nodes called miners compete to solve complex puzzles. The first one to solve it adds a new block to the blockchain and gets a reward. Bitcoin uses this method.

• Proof of Stake (PoS): With PoS, nodes called validators are chosen to propose and validate new blocks. They’re chosen based on how much cryptocurrency they own and are willing to "stake" as collateral. Ethereum now uses this mechanism.

Adding blocks to the blockchain

Once a block is validated, it’s added to the blockchain. Nodes then update their blockchain copies to reflect the new block, maintaining network consistency. Blockchain nodes work collaboratively to process, validate, and record transactions, preserving the decentralized and secure nature of blockchain networks.

What are the different kinds of nodes?

Blockchain networks rely on different types of nodes, each serving a unique role in maintaining blockchain functionality.

Full nodes

• Definition: Full nodes store the entire blockchain ledger, encompassing all transactions from the network’s inception.

• Function: Full nodes check transactions and blocks, making sure they follow the rules. They also share data with other nodes, helping the network to stay decentralized.

• Contribution: Full nodes improve security and trustworthiness within the network by maintaining a complete copy of the blockchain.

Light nodes

• Definition: Also known as Simplified Payment Verification (SPV) nodes, light nodes store only essential data, such as block headers, rather than the full blockchain.

• Function: They use full nodes to verify transactions, which saves resources. Light nodes are common in wallets and apps with limited storage.

• Contribution: Light nodes make it easier to use blockchain without extensive storage, helping more people to use it.

Masternodes

• Definition: Masternodes are specialized full nodes that perform additional functions beyond standard transaction validation.

• Function: They often handle tasks like completing instant transactions, participating in governance decisions, and improving privacy features. Unlike mining nodes, masternodes don’t add new blocks to the blockchain.

• Contribution: By offering advanced services and governance capabilities, masternodes contribute to the network’s efficiency and decision-making processes.

Mining nodes

• Definition: Mining nodes, or miners, use computational power to solve complex cryptographic puzzles, a process known as Proof of Work.

• Function: Upon solving these puzzles, mining nodes add new blocks to the blockchain and receive cryptocurrency rewards. This process secures the network and confirms transactions.

• Contribution: Mining nodes are essential for block creation and maintaining the blockchain’s integrity through consensus mechanisms.

Staking nodes

• Definition: PoS staking nodes validate new blocks by locking up a certain amount of cryptocurrency as collateral.

• Function: These nodes are selected to propose and validate blocks based on the amount of cryptocurrency they stake, incentivizing honest behavior.

• Contribution: Staking nodes provide energy-efficient block validation and enhance network security by aligning validators’ interests with the network’s health.

Why are blockchain nodes important for decentralization?

Blockchain nodes maintain the decentralization of blockchain networks. Here’s how they contribute.

Distributing power across the network

Each node holds a copy of the entire blockchain, ensuring no single entity controls the data. This distribution prevents central points of failure and promotes transparency. Nodes validate transactions and blocks, agreeing on the network’s state. Shared responsibility means decisions are made by the majority, not a central authority.

Improving network security

A higher number of nodes increases the network’s security. For instance, Bitcoin’s extensive node network makes it highly resistant to attacks, as compromising the majority becomes impractical.

With data replicated across numerous nodes, the network can withstand failures or attacks on individual nodes without compromising overall integrity.

Preventing centralized control

Each node validates transactions, preventing single entities from gaining undue influence. No central body can censor or change transactions, which keeps the network open and neutral.

How can you set up a blockchain node?

Setting up a blockchain node yourself helps to support decentralized networks like Bitcoin or Ethereum. Whether you want more privacy, to help the network, or to earn rewards, here’s how to get started.

Step 1: choose the blockchain network

Do you want to run a Bitcoin node or an Ethereum node? Each has unique requirements:

• Bitcoin nodes prioritize decentralization and privacy.

• Ethereum nodes allow for participation in staking and decentralized applications.

Step 2: check hardware requirements

To set up a blockchain node, you’ll need the right equipment. Here's a quick overview of ther requirements for Bitcoin and Ethereum nodes.

Bitcoin node

• Storage: At least 700 GB for the blockchain data.

• Memory: Minimum of 2 GB of RAM.

• Internet: Reliable broadband with unlimited data is recommended.

Ethereum node

• Storage: Around 1 TB.

• Memory: 8–16 GB of RAM for smooth operation.

• Internet: High-speed, stable connection with consistent uptime.

Step 3: Install the required software

Bitcoin node

• Download Bitcoin Core.

• Configure it to start downloading the blockchain, which can take several days.

Ethereum node

• Use a client like Geth or Nethermind.

• Sync with the Ethereum blockchain. Initial synchronization can be time-intensive.

Step 4: Maintain and update the node

It's recommended to keep your node running continuously to help process transactions. Meanwhile, be sure to regularly update the software to stay compatible with network changes.

Step 5: Understand rewards and motivations

Bitcoin nodes

Bitcoin nodes provide no direct rewards, but you do contribute to network security and enjoy improved privacy. Don’t get this confused with miner nodes, which are rewarded for mining a successful block.

Ethereum nodes

If you stake 32 ETH as a validator, you can earn blockchain rewards for securing the network.

What are the challenges of running a blockchain node?

Running a blockchain node is a commendable way to support decentralized networks, but it comes with its own set of challenges. Understanding these hurdles can help you prepare and manage your node effectively.

High storage requirements

• Full nodes: Full blockchain ledgers are stored on these nodes. As of 2024, Bitcoin's ledger exceeds 550 GB, while Ethereum's is around 1 TB. This requires a lot of disk space, ideally on SSDs for better performance.

• Pruned nodes: To mitigate storage demands, some opt for pruned nodes, which retain only recent blockchain data, reducing storage needs to about 7 GB.

Bandwidth consumption

• Data synchronization: Nodes must continuously download and upload data to stay synchronized with the network. This can consume significant bandwidth, with Bitcoin nodes requiring approximately 5 GB per day for uploads and 500 MB per day for downloads.

• Network stability: A stable and high-speed internet connection is essential to handle this data flow without interruptions.

Energy consumption

• Mining nodes: Nodes involved in mining, especially in PoW systems like Bitcoin, require substantial computational power, leading to high energy usage. This not only increases electricity costs but also raises environmental concerns.

• Non-mining nodes: While they consume less energy, they still need to run continuously, contributing to ongoing electricity usage.

Technical expertise

• Setup and configuration: Installing and configuring a node demands a good grasp of the blockchain's software and network protocols.

• Maintenance: Regular updates and troubleshooting are necessary to keep the node operational and secure. This requires ongoing attention and technical know-how.

Hardware costs

• Initial costs: Purchasing the necessary hardware, such as high-capacity storage devices and reliable servers, can be costly.

• Upgrades: As the blockchain grows, your hardware may need upgrades to handle increased storage and processing demands.

Security considerations

• Exposure to attacks: Running a node exposes your system to potential cyber threats. Implementing robust security measures is crucial to protecting against attacks.

• Data integrity: Making sure the data your node processes and stores remains uncorrupted is vital for the network's health.

The final word

Blockchain nodes embody decentralization, security, and trust. From validating transactions to maintaining a transparent and tamper-resistant ledger, nodes ensure blockchain networks remain robust and reliable.

Whether you’re planning to set one up or just curious about their role, understanding nodes provides valuable insight into the foundation of decentralized technology.