Nodes are among the most important aspects of nearly any blockchain, but the term rarely appears when the inner workings of cryptocurrencies such as Bitcoin are introduced. Quite frankly, you cannot claim to understand how crypto works if you don't know the many and varied types and functions of nodes on the network.
This article strives to fill this gap by explaining what nodes are and what they do in layman's terms, allowing anyone to comprehend their importance in the cryptocurrency community. It begins by defining nodes before highlighting how some of the most important types serve their functions. The Bitcoin network will be used as the standard example, but most altcoins follow a similar structure unless otherwise noted. Without further ado, it's time to learn more about blockchain nodes!
What Is a Blockchain Node?
A blockchain node is any computer running the open-source software associated with a particular token. For example, a computer running the Bitcoin software would be a Bitcoin node, while one running Ethereum software would be an Ethereum node. All of the computers running a cryptocurrency's software combine to form a network that shares transaction information and assists miners in maintaining the system's integrity.
The Bitcoin network provides a good illustration of how these networks work. While it's easy to see the Bitcoin blockchain as a singular entity multiple computers can access, each node stores its own copy of the ledger. Naturally, these copies must be identical if the network is going to function.
That's where the nodes come in. Bitcoin nodes verify and broadcast transactions to other nodes, ensuring that everyone is working with the same information. Miners compile the reported transactions into blocks that are then sent back to the nodes for authentication. Whenever a node receives and authenticates a new transaction or block, it's shared with the rest of the network to keep everyone in sync.
The Bitcoin authentication process involves proof-of-work (PoW) consensus rules. If a transaction or block fails to follow Bitcoin protocols, nodes will discard it instead of sharing it with the rest of the network. Each node tests information independently, so node B doesn't "know" whether node A accepted or rejected a transaction and must perform its own test. Once a critical mass of nodes approves a transaction, it gains "pending" status and can be batched into a block by miners.
This creates a trustless system where a distributed network of node operators and miners validate transactions without permission or censorship. In contrast, more traditional currencies, such as the American dollar, rely on banks and payment processors to determine whether an individual has enough funds to make a purchase.
The Types of Blockchain Nodes
Any computer can become a node by downloading the appropriate software, but some types of nodes require more processing power than others. Most nodes in the Bitcoin network can be classified into one of two types: full nodes and lightweight nodes.
Full Nodes
Full nodes download every block and transaction on the blockchain and verify them against the rules of the given blockchain. Full nodes comprise the majority of the Bitcoin network and can be further subdivided by function. Here are a few of the most important:
Mining Nodes
Mining nodes are full nodes utilizing special software to solve complex math problems to generate new blocks and add them to the blockchain. They compete with each other to verify transactions first and claim financial rewards. Mining nodes require extremely powerful, energy-intensive hardware.
Lightning Nodes
Lightning nodes are full nodes acting as a bridge between the standard network and a "lightning network" designed to facilitate faster transaction processing. Lightning nodes may also provide additional liquidity to help facilitate transactions and charge a fee for the lightning network.
Archival Nodes
Archival nodes are full nodes that accept incoming connections and upload old blocks to other nodes in the network. Archival nodes can also act as authority nodes, serving as the source of any blockchain changes while ensuring all network participants have an up-to-date copy of the blockchain.
Pruned Full Nodes
Pruned full nodes have limited memory, so they automatically delete the oldest blocks to make room for new ones. They still perform all of the functions of a full node and are easier to maintain.
Master Nodes
Master nodes are full nodes with additional functions such as private transaction support, instant transactions, treasury management, funding, and governance voting. They require more power than standard full nodes but less than mining nodes.
Staking Nodes
Staking nodes provide a financial incentive to maintain full nodes and contribute to the stability of a particular blockchain. They don't exist on the Bitcoin network but are common with altcoins such as Ethereum 2.0, Cardano, and Cosmos. The exact parameters vary by token and may require time on the blockchain or minimum wallet balances to receive payouts. Likewise, the size of payouts may be affected by the total number of stakeholders.
Lightweight Nodes
Lightweight nodes also verify transactions but differ from full nodes in that they don't verify all transactions or store a copy of the blockchain, instead downloading only key header data like a hash reference to the previous block and mining time. This reduces how much processing power they need, making them cheaper to maintain. Their primary function is as a simplified payment verification (SPV) client.
Parting Thoughts
The complexities of blockchain nodes are as interesting as the networks they serve, but the information above is a solid introduction to what they are and how they work. You can think of them as a crypto news network that reports the latest transactions and blocks while verifying other participants are acting in good faith.
If you want your own node, all you have to do is download some software to get started. Running a full node gives you a say whenever blockchain changes are contemplated and a pathway to expedited transaction processing. Many crypto enthusiasts also run nodes simply to support the network(s) they believe in. Without nodes, even established blockchains like Bitcoin would quickly fall apart.