What is a Blockchain Node Exactly?
When researching cryptocurrency or blockchain, you have likely come across the term “node” multiple times. But what does this word mean? Is it important to know?
Nodes are a major aspect of blockchain, and in order to understand the technology, you do need a base knowledge of what a node is and how it operates. Keep reading to learn more about nodes and other technical blockchain terms you may need to know.
What is a Node?
A node is a computer that is attached to a blockchain network. Similar to a server, unlike a server, each node on a blockchain only stores part of the records for that blockchain. This means that running a node for a blockchain is easier than running a server for a traditional website.
What Do Nodes Do?
Nodes work to execute and record transactions on the blockchain they are assigned to. The process of executing transactions requires a consensus with other nodes on the blockchain, similar to a voting process in real life. The consensus method used is outlined in the software of the blockchain, and there is a certain process that must be followed by all the nodes wishing to participate in consensus. If enough nodes on a blockchain agree that a transaction is verifiable and that the elements of the transaction exist, it is executed.
The executed transaction is then recorded in the digital ledger on that node. As you may expect, because blockchain works on a consensus, not all nodes have records of the most recent transactions. To remedy this, once a group of transactions is complete, the nodes will broadcast the ledger, ensuring all nodes on the blockchain have the most recent version.
The process of verifying transactions in a block and adding said block to the blockchain is a process often referred to as mining cryptocurrency.
How Do Nodes Work?
Nodes work via a connection to other nodes on the same blockchain. Basically, as long as one full node retains a connection to at least one other full node, the blockchain will persevere, even if several nodes go offline for an extended period of time. Because when those nodes restart, they will attain the most recent list of transactions from the two full nodes before becoming part of the consensus mechanism.
On a financial note, nodes make money for the individual paying to run them each time they add a block to the blockchain. Nodes on blockchains are paid when they add the next block to the blockchain—either by transaction fees or a mining reward. While the most famous blockchain, Bitcoin, is deflationary (meaning the mining reward will decrease over time), on other blockchains the reward is stable, ensuring mining remains profitable for miners who run nodes on the blockchain.
Types of Nodes
As you probably know, there are many different blockchains, and as such, there are multiple types of nodes. Below are the most common ones.
Light Node
The “lightest” of all the nodes on this list, light nodes need much less electricity (and thus are much cheaper to run) than other nodes. Light nodes use less electricity because they don’t keep a full copy of the ledger. Rather, they just participate in consensus, and that’s it.
Full Node
A full node is a node on a blockchain that retains both a full copy of the distributed ledger and participates in consensus. Most blockchains require a minimum number of full nodes in order to protect the future of the blockchain and ensure the blockchain can recover in the case of a widespread outage.
Pruned Node
A pruned node is something between a light and a full node. While it retains a list of transactions, it only goes back to a specified time or transaction, making it a lighter option than a full node but more robust than a light node.
Archival Node
Archival nodes are the opposite of light nodes. They store a complete history of a blockchain, which, as you can imagine, takes a lot of memory and space on a computer. Archival nodes often don’t participate in consensus mechanisms, unless they are associated with a blockchain running on a proof of history consensus mechanism.
Mining Node
A mining node is a specific type of full node, specifically one that is associated with a proof-of-work blockchain. These nodes require special chips to process large equations while also storing a major part of the complete ledger of the blockchain. Miner nodes are most common on the Bitcoin blockchain.
Staking Nodes
Most famous for their association with the Ethereum blockchain, staking nodes are part of a blockchain running on a proof-of-stake consensus mechanism. These nodes are required to hold a certain number of tokens in order to participate in the staking process—and that number is set by the blockchain.
Authority Nodes
Authority nodes are associated with the proof of authority consensus mechanism, which is generally not available in decentralized blockchains. These nodes are able to validate transactions based on their assigned authority in the blockchain, making them very centralized. Generally, no one can just “set up” an authority node.
Do All Blockchains Have Nodes?
In short, yes, all blockchains require nodes to process transactions, as this is what makes them blockchains. It’s important to note, though, that not all blockchains require full nodes, staking nodes, or authority nodes.
Most blockchains only operate on one type of node, though some of the newer blockchains utilize two. It is rare to see a blockchain using more than two types of nodes to process transactions and maintain the ledger.
The type and number of nodes used by any particular blockchain will vary based on the setup, consensus mechanism, and size of the blockchain. If you are interested in running a node, it’s important to research the blockchain you would like to run one for before taking part. You never know when you may need special equipment, a permit to use that much electricity, or involvement in that blockchain to set one up.
