Crypto Nodes Explained: Uses, Setup, and Why You Need One

Let’s remember, first, that cryptocurrencies don’t work at all like older financial systems. While the latter ones have companies, organizations, and governments in full control of every transaction, decentralized coins (if built right) give up that control to their community, in the form of a global computer network. Each computer or piece of hardware running the right software and connected to its peers is considered a node of that specific network.

Now, it’s worth noting that distributed ledgers operate as an interconnected system of nodes, each one storing a copy of all valid transactions. To ensure that everyone agrees about which transactions are legitimate and which ones aren’t, nodes rely on several consensus mechanisms. These are algorithms designed to ensure that all nodes agree on the current state of the whole network and its transactions by rewarding good behavior and punishing attack attempts.

So, we can say that a cryptocurrency system is essentially a large network of interconnected computers (nodes) where each one of them has a copy of a digital ledger containing all transactions ever made in that system. These nodes constantly communicate with each other to ensure that every transaction is valid and recorded correctly without the need for a central authority overseeing the process. However, there are different types of nodes, each one performing different functions, depending on the network and the user.

Types of Crypto Nodes

Not all cryptocurrency networks have the same internal workings or types of nodes, but we can say that they share some common traits. In this vein, there are mainly two types of crypto nodes: full and light. At the same time, full and light nodes could perform different kinds of tasks.

• Full Nodes: they maintain a complete copy of the ledger and validate every transaction by connecting with others in real time, ensuring the network's security and integrity. They store the entire history of transactions, making them more robust but requiring significant storage space and computation. Full nodes are crucial for decentralization, as they contribute to the network's consensus mechanism by independently verifying transactions without relying on third parties.

  
  

• Light Nodes: also known as SPV (Simplified Payment Verification) nodes, they don't store the entire chain but instead rely on full nodes to verify transactions. They only download the information they need to operate, such as transactions involving their accounts. As its name suggests, they're lightweight and require less storage and computational resources, making them suitable for mobile and low-powered devices. However, they sacrifice some level of security and decentralization since they rely, at least partially, on trusted full nodes to verify transactions accurately.

  
  

Full nodes are commonly used by major users, infrastructure providers, miners, developers, "validators," and enthusiasts who want to contribute to the network's operation and verify transactions without trusting a centralized authority. On the other hand, light nodes are aimed at non-technical crypto users. They’re ever-present in cryptocurrency wallets and applications where resource efficiency and speed are prioritized over complete decentralization.

Running a Crypto Node

Well, maybe you’re already running a crypto node if you’re using a crypto wallet app. That one is equivalent to a light node, and it’s the easier option to pick. They work to check balances, send and receive transactions, and a few more things, depending on the network and the wallet app. However, you’ll need to run a full node if you want complete independence, complete confidence in the integrity of all transactions, quick access to all data on the ledger, or access to specific data or functions that only full nodes can provide.

The requisites to run a full crypto node vary widely according to the selected network, but they’re basically a piece of software to install and keep running most of the time, along with a heavy copy of the selected chain in full, which means, all transactions ever made. This, for instance, implies over 557 GB in Bitcoin, around 990 GB in Ethereum, and 103 GB in Obyte.  So, you’ll need enough local storage, energy, and computer power to maintain a full node.

In exchange, they can also work as their own wallet with increased security and decentralization, open the doors for participation in consensus mechanisms (and the rewards that may come with it), and enable access to some advanced features, if available.

To sum it up, running a full crypto node involves setting up and maintaining a computer or server that connects to the network, stores a copy of the ledger, and participates in validating transactions and reaching consensus. This typically requires installing specialized software provided by the cryptocurrency's developers, configuring network settings, and ensuring the node has sufficient storage space and computational resources.

Once the node is operational, it continuously communicates with other nodes in the same system, relaying transactions, verifying their validity, and contributing to the decentralized consensus mechanism, thereby helping to secure the network and maintain its integrity.

Nodes in Obyte

Obyte also has full and light nodes organized in a Directed Acyclic Graph (DAG) ledger structure. To reach consensus among nodes, Obyte has avoided miners or “validators,” who are powerful players in blockchains, and it has Order Providers (OPs) instead. They’re reputable users that run full nodes and only post transactions regularly that serve as waypoints or guides to order the rest. They receive token rewards for it but lack the power to block or censor individual transactions, even if they all collude.

As for nodes specifically, a full node encompasses several essential functionalities. Among other things, it could work as a full wallet, a hub, a relay, or an OP. The first one offers users complete control over their assets with features like transaction management, wallet settings, and direct interaction with the ledger. A relay is designed to store the entire database and forward new storage units to peers, playing a pivotal role in maintaining the network's connectivity. Finally, a hub is a relay that also serves as an intermediary for encrypted messages.

These components serve distinct but complementary roles within the Obyte ecosystem, with full wallets catering to user asset management, hubs facilitating secure communication among network participants, OPs in charge of ordering the DAG, and relays ensuring the efficient dissemination of ledger data across the network.

For their part, light nodes offer several possibilities as well. They include a lightweight wallet available for desktop and mobile, and a headless Obyte wallet for developers. In one way or another, anyone can participate freely in the Obyte network. Detailed instructions to install and run any type of node are available in our documentation and official website.