Nodes are the blockchain‘s physical infrastructure. The hardware — typically desktop computers, laptops, or servers — that supports cryptocurrency networks.
There are three main types:
Block-producing nodes, or mining nodes
These are the nodes that create new blocks. They do this by solving complex mathematical problems, a process called proof of work or proof of stake.
These nodes validate every single transaction and block on the network by confirming that proof of work or proof of stake is accurate. If the block is verified, it’s accepted and added to the blockchain. If it isn’t, the block is rejected.
The system is designed to be completely trustless. The proof is in the maths. So if a node determines that a block isn’t valid, it’ll reject it, even if all the other nodes on the network have accepted it.
Full nodes also download and store a copy of the whole blockchain, from its genesis to date. Having multiple copies of the blockchain ensures no single person or entity can unduly influence the network. It also helps keep the network safe, because there’s no single point of failure.
Light, or lightweight nodes
These nodes verify a block, but not the transactions in that block. This is because they don’t download a full copy of the blockchain.
Lightweight nodes can only connect to the network through a full node. They also have to trust that the mining nodes and full nodes didn’t make any mistakes when executing and verifying the transactions that make up a block.
Their advantage is that they’re less resource-heavy and, so, cheaper to run than either mining nodes or full nodes.
- It wouldn’t be possible to access the blockchain and its data without nodes. For this reason, it’s fair to say that nodes are the blockchain.
- Alongside mining nodes, full nodes, and lightweight nodes, some networks also have masternodes. As the name suggests, masternodes are more powerful than full nodes. Besides validating blocks and storing up-to-date copies of the blockchain, they can also facilitate other events such as voting and protocol execution.
- Needless to say, masternodes are much more resource-heavy than mining nodes and full nodes, so they’re pricey to buy and run. And because they’re so powerful, there’s also potential for abuse. As a result, you typically have to post collateral to run a masternode. This acts as insurance in case you break the rules.
The amount of collateral you must post depends on the network. On the DASH network, for instance — DASH was one of the first blockchain networks to introduce masternodes — you have to post 1,000 DASH coins. At the time of writing, this works out at around $90,000.
The upside is that you earn interest on your collateral, which makes masternodes a good source of passive income.
Want to know more?
- This Medium article thoroughly explains how nodes work while still managing to keep things reasonably simple and straightforward.
- In a rush? This video is a mere 26 seconds long and explains nodes in the simplest terms possible.
The Metaco view
“Nodes are the foundation of the blockchain, so ensuring their integrity is crucial for maintaining security and fostering trust in cryptocurrency networks.”