Why Should I Run a Bitcoin Node?
Table of Contents
- Running a Bitcoin node allows a user to interact with the Bitcoin network more privately and securely.
- A Bitcoin node enables a user to prove their ownership of bitcoin without relying on any third party.
- Setting up a Bitcoin node is relatively simple, and it strengthens the robustness of the network.
What Is a Bitcoin Node?
A Bitcoin node is any computer that runs a Bitcoin implementation and stores the entire blockchain. Nodes validate each block and transaction before adding them to the blockchain.Thus, they serve as the referees of the Bitcoin network, setting and enforcing the rules about which transactions and blocks are valid and which are invalid.
Bitcoin nodes share new blocks and transactions among themselves in order to keep each node up-to-date on the state of the blockchain. This sharing occurs over a peer-to-peer network; each node connects directly to several other nodes and shares data with those nodes. Most nodes connect over the internet, but some nodes connect via satellite, mesh network, or even radio. This peer-to-peer network ensures that there is no central authority controlling the blockchain.
How Many Bitcoin Nodes Exist?
There is no definitive method for counting the number of Bitcoin nodes in existence. This is because Bitcoin nodes can operate privately, collecting blocks and transactions without announcing their existence to the rest of the network. Furthermore, Bitcoin nodes can leave and rejoin the network at will.
Nevertheless, several techniques exist to estimate the number of publicly visible Bitcoin nodes. One popular estimate, hosted by Bitcoin Core developer Luke Dashjr, claims there are over 47,000 functioning Bitcoin nodes.
Why Should I Run a Bitcoin Node?
Since Bitcoin currently has a sufficient number of Bitcoin nodes, running your own Bitcoin node is mostly self-serving rather than a contribution to the greater good. Running your own Bitcoin node allows you to preserve your privacy and bolster your security. It also allows you to prove that no one is manipulating the Bitcoin network or changing its rules.
When you run your own node, you can create and broadcast transactions directly from the node, and thus avoid using services that might compromise private information. A node also removes the need to use a block explorer to verify the status of your transactions. Block explorers allow third parties to track your transaction history and link it to your IP address, leaking your physical location, your bitcoin balance, and your financial counterparties.
Using a Bitcoin node to create transactions can also improve your security, by reducing or eliminating the need to expose your private keys to the internet. Bitcoin Core, the most popular implementation of a Bitcoin node, allows users to create an unsigned transaction, called a Partially Signed Bitcoin Transaction (PSBT), which can then be signed using a different wallet. This wallet can be completely disconnected from the internet. Once you have signed the transaction, you can use your Bitcoin node to broadcast the transaction. This method of signing and broadcasting transactions increases your security by keeping your private keys completely separated from any external connections.
Removing Trusted Third Parties
Without a node, ensuring that every transaction and block is honest and valid would be exhausting work. You would have no reliable guarantee that there will never be more than 21 million bitcoin. Furthermore, you would have to trust the block explorer you use. At any point, such a block explorer could feed you faulty or dishonest information.
With a node, you do not need to trust anyone, including your brokerage, block explorer, or wallet provider. Because your node stores the entire Bitcoin blockchain, you can enforce their honesty yourself. If a miner attempts to create excessive new bitcoin in a block, your node will automatically reject such a block as invalid. If a user submits a transaction that creates new bitcoin, your node will automatically reject it. If your wallet tells you that your bitcoin balance is 1 BTC, you can guarantee its accuracy against the blockchain at any time.
Strengthening the Network
The Bitcoin network is decentralized thanks to the large number and distribution of nodes and miners. However, In the case of a coordinated attack on the network or a vulnerability in the codebase, many Bitcoin nodes might be taken down simultaneously. In such a hypothetical, it would be important to maintain the network, which may require more nodes than currently exist. For this reason, hosting a node can be considered a contribution to the robustness of the network against black swan events.
For example, if several governments were to attempt to ban Bitcoin and shut down all nodes in those jurisdictions, it would be vital to the security of the network to maintain a significant number of nodes outside of those jurisdictions to ensure Bitcoin’s continuity.
Likewise, if a vulnerability in the codebase took down a significant number of nodes, a critical mass of nodes would need to continue running the network while the vulnerability was fixed.The affected nodes could then rejoin the network.