We Blockchain: Complete Guide to Understanding its Types and Functioning

A blockchain node is a point in the network whose main function is to distribute data among other nodes, ensuring the decentralization of the system while maintaining the efficient flow of information. Nodes can act as intermediaries in the transmission of data or as end recipients, forming the fundamental structure that underpins any blockchain network.

Technical Features of Blockchain Nodes

A node is essentially a server computer ( with a cryptocurrency wallet installed, synchronized with other similar devices. The set of these nodes forms the blockchain. This network architecture allows for the fast and efficient distribution of large volumes of data.

The operation of a node directly depends on the server's capacity. Any device capable of transmitting information via the internet can serve as a node, as long as it is equipped with the specific software necessary for this function.

In most blockchain systems, nodes perform three essential functions:

• Store and distribute information about transactions and balances in the wallets of network participants
• Monitor the implementation of consensus rules )PoS, PoW, among other algorithms(
• Maintain the operation of distributed ledgers, which contain the complete transaction history since the creation of the network.

It is important to highlight that nodes require an internet connection to function. An offline storage device cannot act as a node. However, it becomes a full node as soon as it establishes a connection to the internet.

The Importance of Nodes for Blockchain Networks

To ensure the stable operation of a blockchain, a network of servers synchronized with each other is required. The leading value of this configuration is to provide decentralization without compromising the speed of interaction between the information matrices.

Considering that the computational nodes are distributed across different countries and cities, even blocking the internet in a specific region would not cause the interruption of the blockchain. However, if all the nodes were concentrated in the hands of a single group, they could completely control the network, compromising the principle of decentralization.

Decentralization represents one of the leading advantages of cryptocurrencies. To ensure this characteristic and achieve the effect of data distribution, blockchains utilize numerous smaller nodes that, although they do not participate in mining, store the entire transaction history. This prevents a limited group of people from taking control of the distributed ledger.

Users who provide their computing power to ensure the functioning of the blockchain receive rewards, encouraging more people to connect their computers to the distributed network.

Types of Nodes in Blockchain Networks

Blockchain nodes vary in function and purpose. There are standard types present in many blockchains, as well as additional models used in specific networks with expanded functionalities.

) We Complete ###Full Nodes(

This was the first type of node, originally created for the Bitcoin network. Full nodes form the foundation of the blockchain and participate in the execution of transactions.

A full node contains all information about transactions and blocks from the launch of the network to the present moment. When a user transfers cryptocurrencies, the operation is verified by all nodes and recorded in its history.

Tens of thousands of full nodes can operate simultaneously on a blockchain, constantly exchanging information with each other. Processing this enormous flow of data requires considerable computational power.

When a user installs a full node for the first time, they must synchronize it with the network by downloading the entire blockchain. In some networks, this process requires a lot of memory. For example, in November 2022, the size of the Bitcoin blockchain was 438 GB, which could take several weeks for complete synchronization.

If a node gets disconnected from the network for a while, upon reconnecting it will need to synchronize again, downloading all the information generated during the period of absence.

Full nodes have a specific set of features that distinguish them from other types. One of the most important functions is verifying signatures )keys( to confirm transactions and blocks. If an error is detected, the node may reject the operation. The reasons can vary: incorrect format, algorithm errors, duplication, record manipulation, among others.

Users who operate full nodes can independently verify the received transfers and, if they wish, also participate in mining and receive rewards.

) We Light ###Light Nodes(

Light nodes do not contain complete information about the blockchain. This type of node only stores the record of the block it is connected to and typically does not operate continuously.

Typically, a light node is software that connects to a full node and transmits information from it to the user's computer, such as account balance and transaction history. In practice, a light node uses a full node as a bridge to access the blockchain.

A light node has the essential functions for using cryptocurrencies, without requiring significant computing power or memory, and can even be run on mobile devices. Synchronization usually takes only a few seconds.

) Pruned Full Nodes ###

This type of node downloads the entire blockchain and synchronizes it only on the first initialization. It then automatically loads new blocks and removes old ones when a certain memory limit is reached. Normally, the user can set the size of the node in the settings, for example, 10 GB.

( We Miners )Mining Nodes###

Mining nodes participate in the process of cryptocurrency mining and are exclusively used in blockchains based on the Proof of Work algorithm (PoW). They can be full or lightweight.

To operate this type of node, the user must have powerful computing equipment:

• Central Processing Unit (CPU)
• Graphics Processing Unit (GPU)
• Application-Specific Integrated Circuit (ASIC)

Specialized software installation is also required.

In the Bitcoin mining process, for example, it is necessary to solve complex mathematical problems. As a result of these calculations, the miner finds a unique code value: a hash, which serves as proof of the work done.

The miner then sends the found hash to other nodes, which verify its compliance with the requirements. If the verification is successful, the miner can add a new block and receive the corresponding reward.

( We from Staking )Staking Nodes###

This is equivalent to mining nodes in blockchains that use the Proof of Stake algorithm (PoS). A staking node is also necessary to validate transactions and add new blocks, and it can be either full or light.

In this case, the reward is not granted for mathematical calculations, but for depositing a certain amount of coins into the account. Consequently, to operate a staking node, it is not necessary to acquire expensive equipment. It is enough to configure the software correctly and deposit the required amount.

( Masternodes

A masternode is analogous to a full node: it also stores all the information of the blockchain and synchronizes with it, but has additional functions. They are necessary to ensure anonymity when splitting transactions and sending them between wallets.

The owner of a full node can obtain a masternode if they meet the conditions set by the blockchain. Typically, the leading requirement is to deposit and maintain a certain amount of coins in their account, in addition to making specific configurations on the server ) that vary among different cryptocurrencies ###.

When a user performs an anonymous transaction, their coins are "mixed" in the masternodes. This process may involve different numbers of nodes, distributed globally and selected randomly. The number of mixing rounds also varies, which can be configured manually or automatically. As a result, it becomes impossible to trace the connection between sender and recipient.

Masternodes can operate with the PoS algorithm or with a hybrid PoW/PoS consensus. To incentivize users to create and manage masternodes, the system grants them a portion of the miners' fees. The reward amount varies between different blockchains.

On the NEM blockchain (XEM), the masternode is referred to as a supernode.

( We Lightning

The Lightning Network )LN### is a second-layer add-on for the Bitcoin blockchain, consisting of a network of payment channels between users. This system uses special ultra-fast nodes that synchronize with each other and with the leading blockchain.

Lightning nodes only verify transactions directly associated with them (unlike standard nodes, which verify all transactions on the blockchain). Thanks to this feature, maximum speed in transaction processing is achieved.

( Validators and Oracles

These are additional functions that a node can perform in a decentralized network:

• A validator node is a device that verifies and approves transactions. These nodes can operate using different algorithms, depending on the characteristics of the blockchain.
• An oracle is a node that transmits information from external systems to the blockchain. An example of this data could be the current price of coins on an exchange that operates on blockchain.

A specific script is required to convert the information into a format understandable for smart contracts. Then, the validator validates the oracle data along with all the other information on the blockchain.

In this case, the signal from an oracle is verified by a large number of validators, increasing the overall security of the network.

Forks and Changes in Node Functions

Any cryptocurrency project can be updated periodically. For the updates to take effect throughout the network, all nodes must accept them. Occasionally, disagreements may arise in the community of developers and validators regarding the implementation of certain updates, with some nodes accepting them and others rejecting them. The process of introducing these changes is called a fork.

There are two types of forks:

• A soft fork represents gradual changes and improvements that do not contradict the basic configuration of the blockchain. To accept them, the node owner must update the software. Even if only part of the nodes accepts this update, the system will continue to operate stably.
• A hard fork implies significant changes in the blockchain. As a result, the types of nodes in the network may change completely. For example, in September 2022, the cryptocurrency Ethereum migrated from the PoW algorithm to PoS. Consequently, mining nodes disappeared and staking nodes emerged with validation functions.

If there is disagreement in the community about the acceptance of a hard fork, the network splits into two incompatible blockchains: one maintains the original configuration and the other adopts the new specifications.