We all know Bitcoin and cryptocurrency hold vast promise for liberating the unbanked and others who are not well-served by the traditional financial infrastructure. But something that is often overlooked is the benefits that come from running a Bitcoin node. Running a Bitcoin node helps the Bitcoin community as a whole, but it also offers tremendous benefits for the node owner as well.
Benefits of Running a Node
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Running a Bitcoin node gives you a higher degree of privacy than other Bitcoin holders. Reliance upon other nodes to validate your transactions means allowing other people to know how much Bitcoin you own. This doesn’t seem like a big deal on the surface, but blockchain analysts are more sophisticated than ever about being able to link Bitcoin addresses with real names. This should be enough to give pause to anyone who takes the privacy of their Bitcoin seriously. By validating your transactions on your own node, you keep your transactional information closer to the vest. In these times of massive financial upheaval, protecting your wealth is more important than ever. By running your own node, you help keep your UTXOs private and away from prying eyes as much as possible.
Another benefit of running your node is that you get to have a high degree of control over your node. As it relates to nodes on Bitcoin, there are very few rules and what particular features your node supports, to a large degree, up to you. This autonomy is at the very heart of sovereignty. You are not obligated to trust anything that happens on your node without it being validated by whatever ruleset you decide is appropriate.
Different features of Bitcoin Core, the software upon which Bitcoin nodes are based, are available in different versions of the software. With other features like SegWit, you can simply opt-out of them. If you are handy with C++, you can even remove features from any version of the Bitcoin Core client. Doing this with later versions would enable you to benefit from any bug fixes while being able to remove those features that you don’t want. As long as your client still abides by the essential rules governing Bitcoin, you can still be a member of good standing of the Bitcoin community as a Bitcoin node.
Essentially, unless you run your own node, all your transactions are processed by a third party. Since the third-party node broadcasts transactions from your wallet to the network, any information attached to the wallet might be visible to that third-party. For most users, this may not be a concern, but for others who take their privacy seriously, this can be a dealbreaker.
What’s Required to Run a Node?
The requirements for running a node begin with having a system upon which to get the node set up and running. The two primary options to make this happen are either to use an existing computer, buy a computer, or building in the cloud. Buying a computer obviously requires money. Building a node in the cloud will come with a monthly cost. Whichever path you choose, getting the node set up requires technical skill or at least the patience to learn.
One option is to run a Bitcoin node on a virtual machine (VM) in the cloud. This will generally involve signing up with a cloud provider like Amazon Web Services (AWS) or Google Cloud and paying a monthly fee to cover the computational resources required. The computational requirements are not excessive, but you will need to provision these virtual machines, configure them, install the Bitcoin Core client and manage the firewall for your VM to ensure that your node is exposed from a security perspective.
You could also run a Bitcoin node from a local machine. The cost involved ranges from $0 in the case of someone who already owns a computer they’d like to use, up to around $300 if you are willing to buy a computer, a solid-state drive and the cables to make the connection. You can run a Bitcoin node with as little as 2 GB of RAM and 1 GB of disk space. Bitcoin Core can be installed on Windows, Linux or macOS. There are many good sources of documentation on the internet for setting up a node on all three platforms.
Bitcoin has great potential for liberating billions of people. This is often understood as opening up opportunities for unbanked persons that traditional banking doesn’t have time for. However, few people are aware of how running a Bitcoin node can contribute to financial sovereignty. You increase your privacy by running your own transactions on your own node, running according to your own rules. Bitcoin is very flexible in that you have a plethora of options for how your node runs and you can implement these different validations all while maintaining consensus with Bitcoin.