1/30/25, 3:36 PM What is a Bitcoin node?
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Blockchain and Emerging Technologies ᛫ Lesson 7 ᛫ 15 min
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What is a Bitcoin Node?
• A node is a computer connected to other comput-
ers which follows rules and shares information
• A ‘full node’ is a computer in Bitcoin’s peer-to-peer
network, which hosts and synchronises a copy of
the entire Bitcoin blockchain.
• Nodes are essential for keeping a cryptocurrency
network running.
Contents
Types of nodes
Light node
Full node
Archival Node
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at s s
manage- Masternodes
ment? Everyday examples of using nodes
Is it worth The role of nodes in the blockchain consensus
i ti 50
Security and Bitcoin nodes
How to operate a Bitcoin node
Can you make money with Bitcoin nodes?
What distinguishes Bitcoin nodes from those of other
blockchains?
Future trends and developments in Bitcoin nodes
What software can you use for a Bitcoin full node?
The Bitcoin Halving Event
Want to learn more about Bitcoin?
In the Bitcoin network, nodes fulfil a very important role. You
can imagine them as ‘guardians’, who are constantly moni-
toring the Bitcoin blockchain to distinguish legitimate
Bitcoin transactions from non-legitimate ones. They validate
every transaction and essentially ensure that each Bitcoin
(BTC) is only spent once to prevent double-spending and
reinforce trust and security in the Bitcoin network. By classi-
fying transactions as valid or invalid, they create an
immutable register of all operations. Through this process,
they ensure that all participants share the same, reliable
information and thus reach a consensus on the state of the
blockchain.
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Types of nodes
There are different types of nodes in the Bitcoin network,
each with its own tasks and characteristics. Full nodes vali-
date transactions and blocks, while light nodes provide sim-
plified verification and mining nodes are involved in the cre-
ation of new blocks.
Let’s take a closer look at the specific functions of each
node type on the Bitcoin blockchain.
Light node
There are also “light nodes” or “lightweight nodes” that
depend on full nodes for functioning. They require signifi-
cantly less download and storage capacity than full nodes
since they only download blockheaders from the Bitcoin
blockchain and therefore do not store the entire blockchain.
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Their only task is to verify transactions in the blockchain
using simplified payment verification (SPV).
Full node
The terms ‘node’ and ‘full node’ are often used synony-
mously, but there is actually a difference between the two.
Here’s the definition of a full node according to official
Bitcoin documentation:
“A full node is a program that fully validates transactions
and blocks. Almost all full nodes also support the network by
accepting transactions and blocks from other full nodes,
validating those transactions and blocks, and then relaying
them to further full nodes.”
Pruned Node
Pruned nodes are a type of full node, but they do not store
the entire transaction history of the blockchain. They down-
load blocks from the beginning of the chain until it reaches
a certain limit and then delete the oldest blocks. After
downloading and verifying the entire blockchain, nodes
delete older data to save storage space but retain all neces-
sary information to ensure network security. It is called a
pruned node because the subtree of the decision tree has
been removed, thus the pruned node takes up less space on
the hard drive.
A full node validates transactions and blocks
and accepts transactions and blocks from
other full nodes to support the Bitcoin network.
Archival Node
Archival nodes store and archive the complete transaction
history of the blockchain. They are important to the network
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because they provide a comprehensive data source and can
be used to restore and verify the blockchain, which is partic-
ularly useful for services such as block explorers and wallets.
Archival full nodes, on the other hand, host the entire
blockchain, taking up a lot more hard-drive space than the
pruned full node. Archival nodes are classified into further
subcategories. Archival full nodes include mining nodes,
staking nodes and authority nodes.
Archival full nodes, on the other hand, host the
entire blockchain, taking up a lot more hard-
drive space than the pruned full node.
Mining Node
Mining nodes combine transactions into blocks and add
them to the blockchain by solving complex cryptographic
tasks. This process is called “mining”. Each miner aims to be
the first node to create a new block in the blockchain and
prove that they have performed the required work; this is
known as ‘Proof of Work’. Once the entire network verifies a
transaction, a new block is added to the existing blockchain
and the miner receives a reward.
In the Bitcoin whitepaper, Satoshi used the word “node” as a
synonym for “miner” but over the years these two definitions
branched out somewhat. While technically nodes, “miners”
use specialised ASIC hardware to add blocks to the Bitcoin
blockchain and receive rewards for doing so. The letters
ASIC stand for “application-specific integrated circuits”
which have been designed for a particular use, such as
Bitcoin mining.
Staking Nodes
The consensus principle underlying the validation of trans-
actions of staking nodes is Proof of Stake. To participate in
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the creation, approval and validation of blocks, stakers are
required to hold certain amounts of coins. Besides invested
coins, staking algorithms also consider time in the
blockchain, the total number of stakers in the blockchain, as
well as a random factor in determining who validates a
block.
Authority Nodes
Yet another consensus model is Proof of Authority, which is
more popular in private chain setups. Nodes called “authori-
ties” are designated for creating and validating new blocks
in the blockchain. The majority of authorities is required for
validation.
Validating Node
Validating nodes are active in networks based on the Proof
of Stake model. These nodes validate transactions by stak-
ing their own coin holdings, helping to keep the network
secure and operational. As a reward for their services, they
receive transaction fees or new coins. They play a crucial
role in maintaining a decentralised and secure network.
Masternodes
Finally, masternodes are another type of full node. Besides
storing the entire blockchain and validating transactions,
masternodes stabilise and secure their entire ecosystem and
may offer services such as private transactions, instant
transactions, treasury management and funding and gover-
nance voting.
Everyday examples of using nodes
As a central part of the infrastructure of blockchains, nodes
are used in various places:
Nodes in financial networks: Nodes can validate transac-
tions on a blockchain network like Bitcoin's and ensure that
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those transactions comply with network rules
Nodes in supply chains: Nodes can be used in logistics to
ensure that all participants in the supply chain receive real-
time updates about the location and status of products
Nodes in Smart Contracts: Nodes in crypto networks like
Ethereum can execute smart contracts that automatically
enforce contracts once predefined conditions are met
Wallets: The wallets that need to process transactions are
usually equipped with a light node – a type of network node
that requires minimal resources as it is limited to communi-
cating with the blockchain and relies on full nodes to pro-
vide the necessary information.
The role of nodes in the blockchain
consensus
Consensus in a decentralised network is defined by the rules
based on which the network operates and confirms the
validity of the information contained in the blocks.
Maintaining the consensus between nodes, verification of
transactions and voting on proposals are all among the
main tasks of full nodes.
In a decentralised network like Bitcoin, consensus is at the
heart of ensuring that all transactions are valid and that
there is no double-spending. The full nodes play a crucial
role as they enforce the rules of the network. They confirm
the validity of the information contained in the blocks and
ensure that there is agreement on the status of the
blockchain through voting and verification. Each node con-
tributes to the integrity and security of the network by sup-
porting consensus and thus ensuring the immutability of the
blockchain.
Security and Bitcoin nodes
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The security of the Bitcoin network depends largely on the
distribution and reliability of the nodes. Each node contrib-
utes to overall security because it independently verifies
and confirms transactions. This decentralisation makes
attacks more difficult because it is not a single entity but
many independent actors that ensure the validity of the
blockchain. The Bitcoin full nodes act as a trust anchor in
the network because they maintain a complete copy of the
blockchain and continuously check against the rules of the
network, which makes attempts at manipulation almost
impossible.
How to operate a Bitcoin node
To operate a Bitcoin node, you need the appropriate soft-
ware, which is usually available as an open-source program.
This software can be run on a computer or dedicated hard-
ware. Basic requirements include a continuous internet con-
nection and enough storage space to store and process the
entire Bitcoin blockchain, which can include hundreds of
gigabytes of data.
Setup begins with downloading and installing the Node soft-
ware. This is followed by the synchronisation of the
blockchain, which can take several hours to days depending
on internet speed and computer performance. During oper-
ation, the BTC Node verifies transactions and blocks to
maintain the integrity of the blockchain, thereby contribut-
ing to the security and decentralisation of the network.
Most Bitcoin applications and solutions provide Bitcoin
Node installation files available on Linux, Windows and
macOS. A node is usually installed on Linux computers. There
have been some incidents where attackers have integrated
malware code into the blockchain, which, though not a
direct threat to the nodes, can cause antivirus programs to
raise an alarm and slow down the system.
Can you make money with Bitcoin nodes?
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Operating Bitcoin nodes is primarily a contribution to
strengthening the network and is not primarily focused on
making money. The nodes validate transactions and blocks,
contribute to the distribution of the blockchain, and
strengthen the consensus model, which is crucial to the
overall system.
While mining nodes can earn profits by creating new blocks
and collecting transaction fees, full nodes, which validate
transactions and secure the network, do not receive direct
rewards in the form of Bitcoins. The financial incentive for
operating a node could therefore be more indirect, for
example for the purpose of supporting the network. In some
cases, nodes that offer additional services, such as
Lightning Network nodes, may generate revenue by charg-
ing fees for these services. However, such capabilities are
more suitable for advanced users who are willing to invest
additional time and resources, as they require deeper tech-
nical understanding and management.
What distinguishes Bitcoin nodes from those
of other blockchains?
Nodes in the Bitcoin network have some differences from
nodes in other blockchain systems. Bitcoin is the first net-
work of its kind to use the Proof of Work consensus process.
This implies that special nodes, known as miners, solve com-
plex mathematical problems to create and add new blocks
to the blockchain. However, it is important to understand
that not all nodes in the Bitcoin network perform mining
tasks. While mining nodes can earn rewards in the form of
Bitcoins by creating new blocks, full nodes are responsible
for verifying and confirming transactions without receiving
any financial reward. This separation of tasks contributes to
the security and efficiency of the entire network. The way
mining nodes work requires significant computing power
and energy consumption. In contrast, many newer
blockchains, such as those based on the Proof of Stake
mechanism require significantly less energy, since the vali-
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dation of transactions and blocks is not secured by comput-
ing power, but by the ownership of tokens in the network.
In addition, the size of the Bitcoin blockchain is significant,
which increases the storage and bandwidth requirements
for running a full node. Nodes of other blockchains, on the
other hand, may have different requirements, depending on
the size and complexity of the respective blockchain. Some
blockchains also offer specialised nodes with different roles,
such as Masternodes on the Dash network, which provide
advanced features for network services and receive rewards
for it.
Future trends and developments in Bitcoin
nodes
Understanding how Bitcoin nodes work and what they mean
is very important for anyone interested in trading and
investing in cryptocurrencies. Nodes are the cornerstone of
the Bitcoin blockchain and ensure security, transparency
and decentralisation. Future developments could focus on
further decentralising nodes, improving network security,
and integrating new privacy protocols. Technological
advances like the Lightning Network – a time-locked off-
chain payment channel that enables fast off-chain Bitcoin
payments – promise faster transaction times and lower
costs, which could make Bitcoin more viable for everyday
use.
What software can you use for a Bitcoin full
node?
There are various software available to run full nodes on the
Bitcoin blockchain:
• Casa Node: Easy-to-use, user-friendly solution for running
your own Bitcoin full node on a minicomputer like the
Raspberry Pi
• RaspiBlitz: A solution from Fulmo known for its community
support and extensive configuration options
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• BitBoxBase: A plug-and-play solution designed for secu-
rity and ease of use
• Nodl: Allows users to run a BTC Full Node alongside a
Lightning Network Node
• MyNode: Aims to make running your own network node
easier and more accessible through a variety of premium
services
The Bitcoin Halving Event
A pivotal event in the Bitcoin network is the Bitcoin halving;
a mechanism programmed into Bitcoin's code that reduces
the mining reward by half approximately every four years or
210,000 blocks. This event is crucial as it directly impacts the
rate at which new bitcoins are generated, effectively slow-
ing down the supply increase over time. The halving event is
designed to be similar to the effect of diminishing returns in
mining precious metals like gold, thereby reinforcing the
scarcity and potential value of Bitcoin. As the reward for
mining new blocks is halved, the reduction in new Bitcoin
supply can lead to changes in its price, making this an event
of significant interest to investors and market analysts.
For investors keen on tracking this important event, the
Bitcoin halving countdown is invaluable. These tools enable
investors to make informed decisions based on the antici-
pated changes in Bitcoin's supply dynamics. As each halving
potentially impacts Bitcoin's value and miners' profitability,
it becomes a focal point for discussions and analyses within
the cryptocurrency community.
Want to learn more about Bitcoin?
Why not delve deeper into Bitcoin and other crypto topics?
Take a look at our other helpful Academy articles and learn
all about tools and trading with Bitcoin or other
cryptocurrencies.
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