What Are Blockchain Nodes and How Do They Work?

The deeper the dive into Web3, the longer the vocabulary list grows. If one of those foreign terms-to-know jotted on a keyboard-side scratchpad is “blockchain nodes,” keep reading — we’ve got your back.

To understand what role a node plays within a blockchain, let’s first deconstruct the blockchain itself. Simply put, blockchains are decentralized, immutable, digital ledgers shared across a peer-to-peer network. Acting as a database, transaction data is permanently recorded, stored and encrypted onto the “blocks” that are then “chained” together. The physical, electronic devices (a computer, typically) that maintain copies of the chains webbing a network together, keeping the blockchain operational, are called nodes.

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What Is a Blockchain Node?

Blockchain nodes are the moderators that build the infrastructure of a decentralized network. Their primary function is to maintain consensus of a blockchain’s public ledger, which varies from one type of node to the next.

“On the most basic level, a node is simply a device running the software of a specific blockchain,” explained Till Wendler, co-founder of Peaq, a blockchain platform developed with the intent to actualize the Economy of Things.

Routers, modems, switches, hubs, servers and printers — basically, anything that has an IP address — can serve as a node. 

“On the most basic level, a node is simply a device running the software of a specific blockchain.”

“Node types depend on the architecture and design needs of a specific blockchain protocol,” Wendler said. “They all have different functions to play in maintaining the operations of the blockchain ecosystem.”

Connecting to a network is like surfing the internet, explained Stanislav Zhdanovich, a developer who customizes blockchains at MetaLamp. Nodes serve the same function as a browser would — it knows the specific network protocol, which makes it capable of interaction with other nodes of the system, he said. 

Zhdanovich noted that being part of a protocol is voluntary. Nothing is at stake, and any node can exit anytime.

 

Why Are Blockchain Nodes Needed?

So, if the beauty of blockchain is that it’s decentralized, meaning, there is no elite, centralized server or main database lording over a network — who is in charge?

In place of a central authority, a blockchain is powered by a fundamental nexus of nodes, which are essentially stakeholders and whatever device that connects them to a network. Control over a platform is democratized across an elected team of nodes that join forces to fulfill mechanisms of utility and governance, such as authenticating transactions and executing decision-making protocols.

“Nodes are the source of truth for a blockchain,” said Nicholas Edmonds, lead blockchain engineer at Topl, an impact tech company building blockchain applications that track, tokenize and monetize industry sustainability.

Nodes moderate a network. They make sure that users play by the rules. Without them, blockchains would essentially lose their infrastructure.

“All tokens and smart contracts exist only in a node,” Edmonds explained. “Any website, wallet or decentralized application using the blockchain can read or modify the blockchain through transactions only by sending a request to an active node connected to the network.”

The more nodes a blockchain hosts, the more decentralized it will be. Consider decentralization as a spectrum rather than a pass-or-fail label slapped onto a platform. From a technical aspect, a healthy number of nodes spread across unique locations is integral to decentralization in contrast to the alternative — a concentration of power.

“Nodes are the source of truth for a blockchain.”

In a worst-case scenario, a fewer number of nodes in charge of checks and balances can go rogue, conspire and collude a network, stealing its funds. This is known as a 51% attack.

A high node count ensures resilience to a network, populating majority-rule systems while increasing the difficulty level for infiltration, outnumbering the enemy.

In volume, the number of nodes moderating crypto-market leader Bitcoin has dropped to 44,000, surpassed by open-source, smart-contract platform Ethereum, now hosting over 4.7 million nodes, according to Etherscan.

However, there is an important caveat to multinodal systems, Edmonds indicated. It concerns digital assets, like cryptocurrency and non-fungible tokens.

“With nodes being the source of truth, it’s important to remember that wallets do not store tokens directly. They must constantly be syncing and updating to a node whenever new transactions — based on the addresses the wallet is in charge of — are made,” he said. “Unless you are running a node that your wallet is connected to, your wallet is pending requests for up-to-date data from a node that someone else owns.”

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How Do Blockchain Nodes Work?

Operationally speaking, there are three main purposes a node fulfills: maintenance, validation and accessibility. Nodes are the custodians of a blockchain. They keep all copies of the ledger in sync, storing encrypted data of past transactions while taking on new blocks for scalable growth.

They are algorithmically programmed to execute transactions based on a majority consensus. In short, peer nodes accept or reject proposals: Those that are authenticated get added to the blockchain, copied and distributed network-wide while unapproved proposals are killed. Consensus mechanisms ensure that all nodes remain in sync. New blocks are processed live, and all copies of the ledger instantaneously update. In agreement, nodes unanimously reflect the true state of a network.

Finally, nodes are the storage containers of a blockchain. So, any time an in-network user retrieves information, they are interacting with a node. They remain completely transparent and accessible to anyone.

As an example, Wendler points to Polkadot, an open-source, layer-0 blockchain that acts as a framework beneath the layer-1 blockchains, or parachains, that run on top of the main network, labeled the relay chain.

Collator nodes, a unique feature to Polkadot, act as a touchpoint that synchronizes parachains with the relay chain as well as facilitating communication between parachains. To do this, collator nodes simultaneously run a full node of their respective parachain and a full node of the relay chain.

“This positions them as a crucial communications channel between the target parachain and the relay chain, and, by extension, with other parachains in the ecosystem,” Wendler explained, singling out the platform’s cross-connecting capabilities as the main reason why his Berlin-based, deep-tech company will be operating on a parachain. “Interoperability is crucial for the Web3 space as it enables users to leverage hundreds of decentralized applications across a variety of networks, and Polkadot offers a native interoperability capacity that’s unmatched in the blockchain space. It’s hard to understate how important that is.”

To note, Polkadot hosts many different types of nodes. While collator nodes function as messengers, validator nodes support the consensus mechanism, keeping the transaction record straight and up-to-date. Neither of these node types would be able to function without the archival nodes, however, which store and maintain the network’s transaction history in full.

“Furthermore, the relay chain gives parachains the security and scalability they need to be able to focus first and foremost on their core mission,” Wendler added.

Peaq is developing an infrastructure with the owners and manufacturers of vehicles, machines, robots and other physical applications in mind. Their blockchain includes an array of machine-specific functions such as role-based access or decentralized machine identities.

“By leveraging Polkadot,” Wendler said, “we can get the scale and security the Economy of Things will require without having to scale our own network for years first.”

 

10 Types of Blockchain Nodes

Blockchain nodes are grouped by the functions they perform. Despite their differences, all nodes work toward maintaining the integrity of a network.

Zhdanovich, whose Haskell programming language skills helped create third-generation blockchain platform Cardano, noted that developers consider two factors when building out a blockchain platform and the nodes that will regulate it.

First, one blockchain protocol can require a multitude of nodes, with each fulfilling complementary roles in a network’s ecosystem. A general, seven-node network, for example, may be inclusive of four computers, a router, a printer and a remote device. The configuration will correlate to a blockchain’s specific needs.

Additionally, nodes may vary by their level of engagement in a protocol. Some may validate all block history while others only pitch in a portion of storage space. In other words, all nodes are not created equally.

 

Full Node

Full nodes are the servers of a decentralized network. They preserve a blockchain’s transaction history, sync, store, copy and distribute data while also validating new blocks. They continuously regulate rule adherence, creating a trustworthy database that stays honest.

There are two types of full nodes: pruned and archival.

 

Pruned Full Node

The main characteristic of a pruned full node is its set memory limit. “Pruning” begins upon installation, where the node downloads a blockchain in its entirety and begins deleting all but the metadata (in order to maintain sequence) from its oldest blocks, retaining only the most recent entries, until capacity is reached. It does not possess a complete copy of the ledger it serves, allowing its function to prioritize security over storage.

 

Archival Full Node

Archival full nodes store the entire blockchain ledger, recording all transactions up to its genesis block. These are the most common types of nodes, and can be categorized in four groups: authority nodes, miner nodes, staking nodes and master nodes.

 

Authority Nodes

Authority nodes are elected by a community to act as moderators of a private or partially centralized blockchain. 

 

Mining Nodes

Incentivized by freshly minted cryptocurrency, mining nodes verify transactions using a proof-of-work consensus model, a validation method that relies on arbitrary cryptographic puzzles, in order to unlock tokens and add new blocks to a blockchain. With this, these auditing entities, commonly referred to as miners, compete to solve complex mathematical problems that require sophisticated, energy-intensive computing devices for a payout. Miners are computers, typically working in a group, that are owned by an entity, such as an individual or company. Bitcoin uses this mechanism as part of its governance method. 

Currently, miners receive 6.25 bitcoins as a reward for solving a block, equating to roughly $143,000 as of September 2022. The bounty halves every four years, or every 210,000 newly generated blocks. Oftentimes, miners form a joint group to combine computational resources, known as a mining pool, to widen their gait in the race for the prize.

 

Master Nodes

These full node types validate transactions and maintain records. They do not generate new blocks.

 

Staking Nodes

These nodes use a method known as “staking” in their authentication process. Using locked funds as collateral, a proof-of-stake consensus model randomly designates authentication powers to participants who have met predetermined metrics, such as contributing a certain amount of tokens to the protocol or logging in a certain number of hours on a network.

 

Light Nodes

Second to archival nodes in usage popularity, these nodes are designed for fast, simple processing of transactions and daily activities. They are equipped with only the essential data and depend on full nodes to function, as they do not download the full blockchain.

 

Lightning Nodes

To counteract network congestion, lightning nodes execute transactions off-chain through separate, out-of-network connections. Once processed, the transactions are added to the main blockchain. This workaround makes for low-cost, instantaneous exchanges while lightening the load on the network.

 

Super Nodes

Rarest of the node variations, super nodes are created on demand to perform specialized tasks, such as implementing protocol changes or maintaining protocols.