How to Run a Bitcoin Node

person holding silver bitcoin coin

Bitcoin is a peer-to-peer network purpose-built to run by sets of consensus rules. These rules govern the transaction validation process such that the Bitcoin network becomes unsusceptible to transactional frauds without having to resort to centralized architecture. The network relies on the inputs of several nodes, which independently verify new transactions and broadcast their findings to other nodes for further analysis or verifications. In this article, we will explore the functions of a Bitcoin node, why you should consider running one, and how to go about it. 

What Is A Bitcoin Node?

A Bitcoin node is any machine or server connected to the Bitcoin network to partially or fully validate transactions. Think of it as connecting your computer to the Bitcoin network and playing your part in protecting the network from attacks or frauds. The nodal approach to Bitcoin allows it to democratize the network and eliminate the need for a central authority. 

With this, every node can scan through the new transactions added to the blockchain and ensure that they do not contradict Bitcoin’s transaction history. In essence, the more nodes are connected to the Bitcoin network, the more robust and decentralized it becomes. It is clear that decentralization is one of the core reasons for Bitcoin’s growing appeal and the over $700 billion valuation of the Bitcoin market.

However, note that a blockchain node does not necessarily have to be a miner. While it is almost impossible for a solo miner to avoid running a Bitcoin node, an average Bitcoin node is tasked with the validation of transactions and blocks. Bitcoin miners go a step further by setting up extra mining hardware to solve complex mathematical problems, find a new block and load new transactions into it. On the other hand, those simply running a Bitcoin node only have to confirm the validity of the newly founded block and the transactions it contains. 

It is important to mention here that there are two major types of Bitcoin nodes. The first is the Bitcoin full node which is a resource-intensive approach to becoming a validator on the Bitcoin network. Full nodes are tasked with the responsibility of confirming all the transactions executed within the Bitcoin network. Therefore, they download the entirety of the Bitcoin ledger and update it as new transactions are added. 

In contrast, lightweight nodes, which are the second variant of Bitcoin nodes, handpick the most important data when downloading or processing transactions. As such, the storage and processing requirements for this type of node are not as cumbersome as what is expected of an entity running a full node. 

Why Run A Bitcoin Node?

Having understood the core workings of a Bitcoin node, you may ask: Why do I need to run a Bitcoin node? Or What are the perks that come with running a Bitcoin node? Well, the most potent advantage for running a Bitcoin node is the robustness that it gives to the Bitcoin network. As highlighted earlier, the more nodes that exist on the Bitcoin blockchain, the higher the network’s tenacity against certain types of attacks. Therefore, running a node establishes you as one of the entities preserving its decentralization. 

Another reason you should consider running a Bitcoin node is that it gives you a front view of proceedings within the Bitcoin ecosystem. In other words, you can quickly monitor the health of the Bitcoin blockchain and let your findings reflect in your investment decisions. Also, it is easier for those operating a Bitcoin node to identify counterfeit Bitcoins or forked coins. Since you have access to the most recent data on the blockchain, you can tell when someone is trying to send you double-spent coins. 

Likewise, it offers a privacy-enhanced method of transacting Bitcoin. Having full control of a Bitcoin node means that you do not need to give up your private information as you would when using a third-party wallet service for sending or receiving Bitcoin. 

Note that double spending occurs when a network user tries to spend Bitcoin in his/her balance twice. For example, if Sender A, who has only 1 BTC, sends 1 BTC to Receiver B and Receiver C concurrently, then it is clear that Sender A is trying to double spend BTC. It is the responsibility of Bitcoin full nodes to reconcile the balance of Sender A with the executed transactions so that such fraudulent acts do not occur. 

Lastly, running a Bitcoin node provides a more environmentally friendly means of participating actively in the Bitcoin ecosystem. We have witnessed how Bitcoin’s mining energy inefficiencies are the subject of controversies among environmentalists and Bitcoiners. If you would rather prefer to exempt yourself from such a delicate issue and yet engage actively with the Bitcoin network, then operating a Bitcoin node is your next best alternative.

Can You Make A Profit Running a Bitcoin Node?

Unlike mining, you do not receive any financial reward for running a Bitcoin node. However, certain Bitcoin node providers tend to incentivize users for running healthy nodes. 

Hardware Requirements

Full nodes are servers that download real-time data from the blockchain network, analyze the data and broadcast the processed data back to the network. As such, you have to meet minimum hardware and software requirements to run these operations smoothly. For the minimum hardware specifications, we recommend the following:

  • A desktop or laptop hardware with at least 500 gigabytes HDD or SSD and 2 gigabytes of memory (RAM). Note that you need as much as 350 gigabytes of storage to download the entirety of the Bitcoin blockchain. Moreover, the Bitcoin blockchain grows at an average of 1 GB per week. Hence, storage is one of the core factors you need to consider.
  • An internet connection with a speed of at least 50 Kbps. Also, ensure that your internet service provider does not impose low upload or download limits. It is advisable to opt for a broadband internet package that comes with no limits. 

Software Requirements

There are specialized arrays of software for running a Bitcoin node. Ordinarily, you have to download this software on your hardware device, install it and start downloading the Bitcoin blockchain. It usually takes several days to download the whole blockchain. However, after the initial blockchain download, you only need to update your copy of the Bitcoin ledger to reflect subsequent transactions. 

Notably, you would most likely encounter Bitcoin Core while researching the best software for powering a Bitcoin node. Hence, you may begin to wonder: What is Bitcoin Core and why do I need it?

To run a full Bitcoin node, you need to install a Bitcoin client. Currently, the most widely used software for setting up a Bitcoin node is Bitcoin Core. This software is compatible with popular operating systems, including Windows, Linux and Mac OS. Depending on your programming expertise, you can either opt for Bitcoin Core Graphical User Interface (GUI) or Bitcoin Core Daemon. The former uses a more familiar and less technical user interface, while the latter requires command prompts for even the most basic operations. 

Once you download Bitcoin Core, remember to reconfigure your firewall settings and network configuration to allow the software to make outbound connections. 

Apart from this hands-on approach to running a Bitcoin node, you can opt for the less technical and resource-intensive method of patronizing a third-party Bitcoin node provider. Here, the provider takes up all of the hardware and software requirements, only for you to connect your device to the platform’s interface and claim a readymade Bitcoin node. 

Another alternative is the running of nodes on the cloud. In this case, you need to connect to a cloud service provider and install Bitcoin Core in such a way that your storage and processing resources are outsourced.