A Comprehensive Bitcoin Node Guide
Part 2: Why Run A Node?
In my last piece we discussed what a Bitcoin Node is and the different types of Nodes you can run. If you didn't read that or want to refresh your memory, check that out here:
Read: A Comprehensive Bitcoin Node Guide. Part 1: What Is A Node?
Part 2 will focus on why you might want to run a full node. The saying, “Not your keys, not your coins,” also extends to Bitcoin nodes—“Not your node, not your rules.” The same way managing your own keys ensures you can't lose your bitcoin due to the malevolence or negligence of a third party, running a full node guarantees you can't be fooled into accepting invalid bitcoin payments. Running a full node allows you to self-verify transactions rather than rely on a third-party node. Let’s dip into some of the benefits of running a node.
Trustlessness When Transacting
Bitcoin was designed to operate without requiring users to trust anyone for the system to function properly. Full nodes remove the need to trust a third party’s honesty about the ledger because the operator owns their own copy of the ledger. However, out of convenience, users often end up relying on third parties (e.g., block explorers and wallet service providers) that run full nodes to verify their transactions for them. This implies users must trust that this third party won’t feed them unreliable or dishonest information. SPV wallets aren’t trustless since they require users to believe that most of the network’s hash power is conforming to the rules. Though there are many reliable third-party sources, securing self-sovereignty requires users to self-verify their transactions with their full node. Without a network of nodes ensuring that every transaction and block is valid, it wouldn’t be possible for Bitcoin users to know if others are breaking the network’s rules, such as double spending transactions or issuing more BTC than the 21 million total supply. To truly become self-sovereign, one cannot rely on others to prove their ownership of coins; it must be self-verified. If you run a full node and nobody looks at the transactions it validates, it is contributing to the network but isn’t not helping reduce the need for trust. Bitcoin Core developer Pieter Wuille once said, “One of Bitcoin’s strengths — the most important in my opinion even — is the low degree of trust you need in others.”
Security
Because full nodes allow users to transact without needing to trust a third party, they also offer the best security model. Trust in a centralized third party inherently comes with inevitable security vulnerabilities, especially in a $1.25T global financial network. For example, a compromised third-party wallet service could make its users a target for bad actors in rare cases. By using a centralized wallet, users place complete trust in the third party to run a node that enforces the network’s rules. Even if the third party is established and relatively trustworthy, it can still become compromised by hackers, leak user data that could lead to phishing attacks, or even turn on its user base. By running and using a full node to verify transactions, users effectively shield themselves against fraud on the Bitcoin network. Said differently, if only a few prominent players (e.g., block explorers) were running full nodes, it would only require a malicious intent or an attack against them to change the system’s rules because nobody else is validating the authenticity of transactions.
Privacy
Using a centralized wallet or crypto service running its own full node lets the service provider see all the transactions and addresses connected to your wallet. Privacy issues still arise even when using some SPV wallets (lightweight nodes), namely, those that use “Bloom Filtering.”5 Full nodes offer the best privacy as node operators download all the blockchain data and only query for addresses or transactions locally, meaning third parties can’t see your search history.
Rule Enforcement
Full nodes autonomously reject rule-breakers as long as they are up and running. Thus, running a fully validating Bitcoin node and using it to verify payments you receive is the only way to enforce the rules to which you agree.
Providing Altruistic Support to the Network’s Health
While many misconstrue that miners control the network, in reality, it’s the nodes that are in charge. Nodes configured to accept incoming connections altruistically bolster the network by sharing blocks and transactions with other full nodes to help them sync and service data requests from SPV wallets. Put briefly, the network’s resilience against attacks is proportional to the number of people actively running full nodes and auditing the network’s transactions.
More nodes on the network also strengthen the blockchain against political attack vectors. For instance, if a regulator cracks down on Bitcoin nodes and causes operators in its jurisdiction to shut down operations, nodes outside of the jurisdiction would remain online, defending the network’s safety.
Therefore, conducting BTC transactions helps the cryptoasset’s offering as a medium of exchange, running a full node bolsters the network, and using a full node to verify your transactions helps you and the ecosystem reduce the need for trust.
Geographical Distribution of Nodes
There is no foolproof way to count the total number of Bitcoin nodes because they can operate privately, recording blocks and transactions without broadcasting them to the rest of the network. Nodes may lay behind firewalls, or they might not be configured to listen for connections. Moreover, nodes leave and rejoin the network as they please, meaning the total number of nodes is likely much higher than our best estimates, which are limited to active nodes. According to data from Bitnodes, there were 14,078 reachable full nodes on the Bitcoin network at the time of writing.6 Though individuals can run multiple nodes, this at least means less than 14K people on the network trust a third party to verify their transactions. Though it’s challenging to narrow down the geographic distribution of most nodes due to their usage of virtual private networks (VPNs), most identifiable full nodes are situated in the United States (13.86%) and Germany (13.53%), followed by France (4.06%), the Netherlands (2.83%), and Canada (2.37%). The location of more than 44% of reachable nodes are situated in the United States (13.86%) and Germany (13.53%), followed by France (4.06%), the Netherlands (2.83%), and Canada (2.37%). The location of more than 44% of reachable nodes is unidentifiable due to the use of virtual private networks (VPN), which encrypt internet traffic and disguise online identities.
Notably, Bitcoin is not a democracy; consensus is maintained amongst all nodes running the same Bitcoin software and does not include any kind of voting or representation. However, it doesn’t require 100% agreement between nodes either. Consensus is an
ideal in that there is no absolute agreement between all parties involved in most cases; in a consensus-based system like Bitcoin, changes are only implemented if it’s a non- contentious proposal.
Consensus is achieved at the source code level by allowing anyone to propose, review, and comment on changes. Overall consensus in any changes would mean agreement amongst nodes is near-unanimous, though there is no defined threshold. Any changes with a significant portion of disagreement amongst nodes would result in a hard fork.
At the blockchain level, consensus is maintained by all nodes running the same software. All active nodes must agree on fundamental rules, including how many new BTC are created per block and the exact state of the chain (i.e., which blocks and transactions make up the blockchain). If nodes disagree on these rules, the network will split, and the blockchain will fork into several chains. Reconciling a chain split is virtually impossible, which is why it takes time to review, agree upon, and implement changes to the network.
Therefore, for Bitcoin to be sufficiently decentralized, it should have a network with nodes distributed worldwide to allow people of all different walks of life to contribute to the Bitcoin network. A globally decentralized network is a feature necessary for a borderless asset.
How Can You Setup Your Own Node?
Here is a cool video I found that will walk you through setting up a Full Node on a Raspberry Pi.
