What is a Bitcoin node?

Bitcoin nodes are, by definition, the connection points that form the Bitcoin network and keep the blockchain stable and secure. As computers operating under strict network rules, they ensure the smooth exchange and verification of data. These nodes play a crucial role in maintaining the entire Bitcoin ecosystem.

The full node is especially important, as it not only maintains a complete copy of the blockchain but also continuously updates it. Without full nodes, the network couldn’t confirm transactions or uphold the integrity of the blockchain.

In this article, we explore the world of nodes. You’ll learn exactly what a Bitcoin node is, the different types available, and how they impact mining and the maintenance of the overall Bitcoin ecosystem.

• Network foundation: A node is a computer connected to others in the network, following rules and sharing information.

• Data integrity: A full node is a computer in the peer-to-peer Bitcoin (BTC) network that holds a full copy of the Bitcoin blockchain and continuously synchronises it.

• Security: Without nodes, the network wouldn’t function.

• Diversity: In addition to full nodes, there are light nodes, mining nodes and specialised variants. They perform different tasks but are all vital to the operation of the Bitcoin network.

What function do Bitcoin nodes serve?

Bitcoin nodes act as guardians of the network and are essential for its integrity. They serve as protectors that validate every transaction on the blockchain and ensure each Bitcoin (BTC) is only spent once, preventing double spending.

Nodes support trust and security in the Bitcoin network. By determining whether transactions and blocks are valid or invalid, they create an immutable record of all activity. Through this process, they ensure that all participants share the same reliable information, allowing a consensus on the state of the blockchain to be reached.

Types of nodes

There are different types of nodes within the Bitcoin network, each with its own roles and characteristics. Full nodes validate transactions and blocks, while light nodes provide simplified verification, and mining nodes are involved in creating new blocks.

Let’s now take a closer look at the specific functions of each node type on the Bitcoin blockchain.

Full node

The terms "node" and "full node" are often used interchangeably, but they don’t mean the same thing. A full node is a fundamental component of the Bitcoin network, as it strictly checks every transaction according to the network’s rules and stores a complete copy of the blockchain. This type of crypto node validates all transactions and blocks according to the Bitcoin network rules, playing a crucial role in maintaining the integrity and security of the network. Bitcoin full nodes determine whether transactions and blocks are valid within the network.

Light node

There are also "light nodes" or "lightweight nodes", which rely on full nodes for their functionality since they do not store a full copy of the blockchain themselves. Instead, they depend on the data from full nodes to verify transactions. They require significantly less download and storage capacity than full nodes. Their only task is to check transactions in the blockchain according to the network rules using Simplified Payment Verifications (SPV).

Payment node

Payment nodes play a key role in crypto infrastructure by focusing on processing and confirming payment transactions. Unlike full nodes, which store the entire blockchain including all blocks, payment nodes don’t need the full blockchain database.

They specialise in verifying transaction information and history quickly and efficiently, enabling fast and resource-efficient transaction processing. This makes them particularly valuable for networks that must handle high transaction volumes. Thanks to this specialisation, payment nodes contribute to the scalability and efficiency of the network without compromising security or reliability, especially in combination with a Lightning network.

Mining node

Mining nodes combine transactions into blocks and add them to the blockchain by solving complex cryptographic tasks, a process known as mining. These nodes form the basis of Bitcoin’s Proof of Work consensus model and are responsible for creating new bitcoins.

Every miner aims to be the first node to generate a new block and prove it has done the required work. Once the network verifies a transaction, a new block is appended to the blockchain, and the miner receives a reward.

In his Bitcoin whitepaper, Bitcoin creator Satoshi Nakamoto used the term "node" synonymously with "miner". Over time, the definitions of these terms have diverged. Technically, miners are nodes using specialised ASIC hardware to add new blocks to the Bitcoin blockchain in exchange for rewards. ASIC stands for application-specific integrated circuit, which is designed for a specific purpose, such as Bitcoin mining.

Mining also involves the process known as halving:

Bitcoin halving is an automated process that cuts the reward for mining new blocks in half every four years. This slows the creation of new bitcoins and resembles the increasing difficulty and cost of gold mining. Halvings can affect the Bitcoin price, as they reduce supply. The Bitcoin halving countdown is a tool used by investors to anticipate market trends and make informed decisions. The next halving is therefore of great interest to investors and analysts.

Pruned node

Pruned nodes are a type of full node that do not store the entire transaction history of the blockchain. After downloading and verifying the full blockchain, the node deletes older data to save storage space. However, it retains all the essential information needed to maintain the security of the blockchain.

Archival node

Archival nodes store and archive the complete transaction history of the blockchain. They are important to the network as they offer a comprehensive data source and can be used to restore or verify the blockchain. This is especially useful for services such as block explorers and wallets.

Validating node

Validating nodes operate in networks that use the Proof of Stake model. These nodes validate transactions by staking their own coin holdings and help keep the network secure and functional. As a reward for their services, they receive transaction fees or new coins. They play a vital role in maintaining a decentralised and secure network.

The role of nodes in blockchain consensus

In a decentralised network like Bitcoin, consensus is the core mechanism that ensures all transactions are valid and no double spending occurs. Bitcoin full nodes play a key role in enforcing network rules. They confirm the validity of the information in each block and, through verification and coordination, ensure agreement on the current state of the blockchain.

Every node contributes to the integrity and security of the network by supporting consensus and helping to guarantee the immutability of the blockchain.

What to consider when running a Bitcoin node

The security of the Bitcoin network largely depends on the distribution and reliability of its nodes. Each node adds to overall security by independently verifying and confirming transactions. This decentralisation makes attacks more difficult, as no single entity can control the blockchain's validity. Bitcoin full nodes act as trust anchors, maintaining a complete copy of the blockchain and constantly verifying it against network rules which  makes any kind of manipulation nearly impossible.

If you run a Bitcoin node, you're taking on a share of the responsibility. Be sure to meet the following technical and practical requirements:

• Stable internet connection

• Sufficient storage

• Enough computing power to avoid performance issues

• Security measures such as a firewall, protection against malware and regular software updates

• Suitable software and hardware (e.g. Raspberry Pi or Umbrel)

• Keeping the node online continuously to stay synchronised with the blockchain

• Budget for potential energy and electricity costs