Bitcoin nodes
The question "what is bitcoin?" is not a question that can be answered whilst in a lift. There are a lot of new terms of reference, concepts and fundamentals to learn. The legacy financial markets are complicated, but Bitcoin and other digital assets should be far more accessible and understandable.
Bitcoin is not just a new combination of a variety of technologies; it is more than digital gold or digital currency. Philosophically and practically, Bitcoin is about self-sovereignty, therefore, putting control back into the hands of the people, and it is democratic and decentralised money.
Let's talk about Bitcoin Nodes.
But first, let's see some of the legacy financial institutional nodes.
The FED in the USA
The Bank of England
The Bank of Japan
The European Central Bank
Swiss national bank
Bank of Canada
Reserve bank of Australia
Reserve bank of New Zealand
According to www.bis.org, the Bank for International Settlement (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks". To simplify, the BIS is a ledger for all ledgers. In essence, it is a centralised node verifying and settling international transactions. It serves a practical purpose regardless of all the conspiracy theories out there (they're not worth spending time on). I use this as an illustration to help frame Bitcoin nodes. Each of the central banks is like a centralised node verifying and settling transactions conducted internationally. Breaking it down to its simplest form, they are all feeding to a digital ledger system.
What is a node?
Quit simply, a node is a computer that runs the Bitcoin program and is connected to other computers running the same program to create a network. The more nodes there are, the more secure the network is.
The 3 jobs of a node are
1.Follow the rules
Each node has been programmed to follow a set of rules. These rules enable each node to check the transactions it receives and only relay them if everything is correct. If there are any problems, the transaction isn't passed on. The block is not confirmed if the information isn't passed on.
One of the rules is that a person must own an equal or greater amount of Bitcoins than they are trying to send. So if a node receives a transaction where someone has tried to send more Bitcoins than they own, the transaction won't be passed on to the other nodes.
2. Share information
A node's main job is to share information with other nodes, and the primary data a node share is transactions.
There are two types of transactions that nodes share:
New transactions – transactions that have recently entered the network.
Confirmed transactions – transactions that have been "confirmed" and written to a file. These are shared in blocks of transactions and not individually.
3.Keep a copy of confirmed transactions.
Each node also keeps blocks of confirmed transactions, which are held together in a blockchain file.
New transactions are bounced around the network until they are etched into the blockchain, a confirmed transaction ledger.
Each node has a copy of the blockchain for safe keeping and shares it with other nodes if their copy isn't up to date.
Strangely yet amazingly, when you run a bitcoin client, the network doesn't dictate what your node should do. Instead, your Bitcoin client already knows what to do and makes its own decisions. The entire Bitcoin network is made up of nodes making their own decisions, but they each make the same decisions as one another, which makes it completely decentralised. As long as one node runs, the entire Bitcoin network would be upheld, making it incredibly powerful.
Full nodes and light nodes
According to Bitcoin Core 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."
"Light nodes" or "lightweight nodes" depend on full nodes for functioning. They require significantly less download and storage capacities than full nodes since they only download block headers from the Bitcoin blockchain and thus do not store the entire blockchain. Their only task is to verify transactions in the blockchain using simplified payment verification (SPV).
How many nodes are there?
According to bitnodes.io, there are 13,987 bitcoin nodes as of Friday, 5th August 2022 however, there is no definitive method for counting the number of BTC nodes in existence. There are a lot more nodes than central banks, making the Bitcoin network far less vulnerable to attack and, therefore, a significantly more secure structure.
Source: www.bitnodes.io
Why could I consider running a Bitcoin node?
Unlike Bitcoin mining there is no financial reward for running a bitcoin node however, what greater incentive could there be than protecting the network thus protecting your personal wealth. Running your own node allows you to preserve your privacy and bolster your security. It allows you to prove that no one is manipulating the bitcoin network or changing the rules.