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What are Bitcoin Nodes and why do we need them?

Amandeep Sonewane | Mar. 7, 2019
What are Bitcoin Nodes and why do we need them?

March 7, 2019, | AtoZ Markets - It’s a familiar fact that bitcoin is designed as a decentralized peer-to-peer (P2P) network. However, what’s often lost in translation is the massive amount of computational power to maintain this global infrastructure. In order to validate the transactions, bitcoin requires more networks of miners to process transactions on the network. Here, Bitcoin nodes came into play to broadcast messages. This is the first step in the transaction process for block confirmation.

To work to its full potential, the bitcoin network must not merely provide transactions but also remain secure. By using randomly selected nodes, the network can reduce the problem of double spending. The more bitcoin nodes there are, the more secure the network is.

Currently, the number of nodes in the bitcoin network is dropping, and it might continue to drop.

What are Bitcoin nodes?

In simple words, a node is just a computer that is running the Bitcoin program. More importantly, it is connected to other computers to generate a network of nodes.

A node has three jobs: to follow the rules, exchange the information within the network and maintain a copy of confirmed transactions.

  1. Follow rules: Each bitcoin node has been programmed to follow a set of rules. By following these rules, a node is able to check the transactions on the network it receives and confirms everything is working fine. If there are any problems, the transaction fails.                                                                                      
  2. Information sharing: A node’s primary task is to exchange information with other nodes in the network, and the quintessential information a node share is transactions. There are two types of transactions that bitcoin nodes share:
  • Fresh transactions: Transactions that have recently been entered into the blockchain network.
  • Confirmed transactions: Transactions that have been completed and written to a file. These are distributed in blocks of transactions, and not individually.
  1. Keep a copy of confirmed transactions: Each node on top places blocks of confirmed transactions. These are held together in a file known as the blockchain.

Looking at a 1 Year chart of Bitcoin nodes, it shows that the number has gone down significantly. It went from 12,500 reachable nodes in early March to below 11,000 at the beginning of March 2019.

What’s interesting is that during a recent 24-hour period, the number of reachable nodes stays to be constant. This suggests that a portion of users running nodes are full-time miners

Another issue is the demographic distribution of the nodes. The majority of reachable nodes are located in the USA. Whereas in the Africa, where Bitcoin could perhaps help people lacking access to financial resources more than anywhere else, there is a regional scarcity of reachable nodes.

Why do nodes matter?

The more nodes in the blockchain network, the more effective it is. For example, if you have ever used Google maps on your phone, you know that it’s much more efficient in places where lots of Google maps users are gathering and sharing information. As it shares real-time traffic, road information which helps to save everyone's time and gas.

The same is true for Bitcoin. The bigger the network, the more work efficient, secure and transaction speed is.

Think we missed something? Let us know in the comments section below.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.