The beauty of the Bitcoin network is that anyone can participate in it without permission. However, primarily out of convenience, most Bitcoin users don’t run nodes and instead trust third parties such as centralized exchanges and wallet providers to interact with the network on their behalf. This approach comes with notable tradeoffs, including reduced privacy and security, and goes against the entire ethos of crypto. The only way to use Bitcoin without having to trust a third party is to run a full node and use it to verify your transactions.
In this guide, the Kraken Intelligence team explains the benefits of running a full node and how to get your own node up and running.
Why Run a Bitcoin Node?
Though market participants commonly misconstrue miners as the backbone of Bitcoin, validators have the actual power on the network.
When you operate a full node, you remove the need to trust a third party to transact as you can verify all information independently. Said differently, a node can provide you with 100% fraud prevention and reinforce your privacy (as you no longer expose private information to a wallet provider).
What Nodes Do
Nodes validate all transactions that occur on the network and ensure that all proposed blocks comply with the protocol rules, such as the following:
- BTC cannot be double-spent under any circumstances.
- BTC owner(s) must sign transactions to spend their coins.
- The block subsidy cannot exceed a certain amount (₿6.25 at the time of publication).
By communicating with each other, nodes share up-to-date transaction information and compare blocks proposed by miners to verify their authenticity and ensure everyone on the network has the same information. If a node does not recognize a transaction, it will not propagate it to other nodes across the network. As more nodes enter the network, it becomes stronger, more decentralized and less prone to a single point of failure.
Want to learn how to set up your own Bitcoin full node? Download the Kraken Intelligence report Bitcoin Full Node Guide: Securing Self-Sovereignty, to see a step-by-step guide and all of the necessary equipment to run a node on your preferred device.