What is a Blockchain Node?
Understanding The Blockchain And Cryptocurrency
This article describes the function of a “node” in the bitcoin blockchain network.
A “node” is simply a computer running bitcoin’s ingenious core software program. When activated, each node automatically connects with several other nodes (called peers). Instantaneously, each of these several other nodes connect with several more nodes, and so on and so on -- thus composing a network of thousands of nodes spread out across the entire globe. Some sources report that there are over 100,000 nodes.
The purpose of nodes is to accept bitcoin transactions and to verify them against a long checklist of criteria. Then, each node will forward only the valid transactions to its peers to propagate them across the network. Invalid transactions are discarded by the first node that encounters them. An example of an invalid transaction is where the person sending bitcoin is “double spending.” Double spending is analogous to someone writing an NSF check.
Once nodes validate a transaction, the transaction is placed in a holding pool called a “memory pool” (mempool). Then, other computers called “miners” pull transactions from the mempools and place them in a so-called “block”. Blocks are groups of transactions on which thousands of miners perform mathematical calculations in a competition to arrive at a targeted value. The first miner that arrives at the target is awarded 6.25 newly created bitcoin (each currently worth over $47,000). On average, a block is completed every ten minutes – thus, approx. 900 new bitcoins are created every day.
I see nodes as the “good citizens” of the blockchain because they perform a crucial service without compensation. Anyone with a computer (including you) can run a node. It is strictly voluntary and there is no additional cost; but you should be willing to keep it running continuously.
Nodes operate “peer-to-peer” with each other; thus, as peers, all are equal -- none have authority over any others. Each of them can autonomously and authoritatively verify transactions. But they must all abide by the rules written into the core code. Therefore, the bitcoin blockchain can be described as a system of rules without rulers.
Nodes are crucial to maintain the decentralized nature of the blockchain. There is no leader, no boss, no dictator, no government, no central bank -- just thousands of independent nodes run by persons who don’t know each other, each acting out of self-interest. If a transaction is found to be invalid, it is rejected. Imagine if every time you write a check or buy something on a credit card, thousands of “auditors” instantaneously check to see if your transaction is valid and if all parties are acting honestly.
Several months ago, I started running a node on a spare notebook in my home. Before a node can be activated, every transaction that has ever occurred in the history of the network must be downloaded. It took my laptop over two days to download the history. As a proud new owner of a node, I was excited to begin my noble duties, only to be a little disappointed to find that the only thing required of me was to turn on the computer!
As I write this article, my screen indicates that I am connected to nine other nodes. All I know about them and all they know about me is our IP addresses. We are the courageous gatekeepers of the blockchain -- the protectors of its integrity! (Don’t forget to thank us for our service later!)
But seriously, there is something especially elegant about this system -- like laws of physics. Its beauty can be appreciated only after understanding it. We cannot and will not ever advise clients on how to invest money; but, we will encourage you to study the blockchain, get an understanding of it and prepare to exploit its application.
We can help.