Discover the foundations of decentralized crypto networks
Blockchain technology has found applications in a wide range of industries, including financial services, entertainment and supply chain management. And the core mechanism that allows any blockchain system to distribute data—decentralizing storage and verification across a number of independent participants—are called nodes.
When it comes to data storage, the cloud essentially refers to someone else’s computer. All software is connected to hardware somewhere. Similarly, a cryptonode supports a specific network, such as Bitcoin or Ethereum, by maintaining public records of the blockchain’s transactions. In certain cases, such as with Zcash, some transactions are end-to-end encrypted, meaning that the nodes keep a public record of the encrypted transaction data, also known as ciphertext, which helps improve the privacy of the parties involved. (As Head of Global Regulatory Affairs at Electric Coin Co., I work in one of the organizations supporting the Zcash protocol.)
Most people run nodes on their computers at home or build node devices using a Raspberry Pi (a series of small single board computers developed in the UK by the Raspberry Pi Foundation in collaboration with Broadcom). Some companies run nodes on enterprise hardware. Regardless of the form the hardware takes, the node provides the user with its own full copy of the blockchain.
All things considered, if you don’t operate your own node, you are dependent on someone else’s hardware to maintain the public ledger during crypto transactions. Nodes play a critical role in shaping our online interactions, transforming the way we store and exchange information and conduct transactions. This explanation will delve into different types of crypto nodes and their importance.
At the heart of every blockchain network is a decentralized, distributed ledger that stores transaction data using nodes. Blockchain’s public ledger is maintained by a multitude of computers around the world with different people and organizations running nodes.
Full nodes vs. Bright nodes
Full nodes maintain a complete copy of the blockchain, validate transactions and ensure that consensus rules are enforced.
In contrast, lightweight nodes only store a subset of the blockchain data, enabling faster synchronization and lower resource requirements. Although lightweight nodes may not maintain a complete copy of the blockchain, they can still independently validate certain aspects of transactions using cryptographic methods, such as verification of ownership and signatures. However, light nodes can rely on full nodes to verify that a transaction is part of the current consensus, ensuring that there is no ongoing blockchain fork or rollback attack.
There is also a third category of nodes, called mining nodes. In networks using Proof-of-Work consensus algorithms (described below), mining nodes compete to validate and add transactions to the blockchain, receiving a reward in the form of the network’s native cryptocurrency for their efforts.
Blockchain networks use various consensus algorithms to ensure that nodes agree on the validity of transactions and the status of the distributed ledger. Some of the most common consensus algorithms include Proof-of-Work, Proof-of-Stake, and Delegated Proof-of-Stake.
Proof-of-Work
Proof-of-Work is a consensus algorithm used in some cryptocurrencies such as Bitcoin, where nodes compete to solve complex mathematical puzzles to create new blocks. The first node to successfully solve the problem is rewarded, which incentivizes participation in the process.
Nodes act as guardians of the blockchain, as they not only hold a copy of the entire ledger, but also validate new transactions and maintain consensus among participants.
Proof-of-Stake
Proof-of-Stake is a consensus algorithm used in blockchain technology to validate transactions and create new blocks. In PoS, nodes “stake” a portion of their cryptocurrency holdings to participate in the validation process. Depending on the implementation of the consensus algorithm, nodes with larger stakes may be more likely to be selected to validate transactions.
Delegated proof-of-stake
Last but not least, Delegated Proof-of-Stake is a consensus algorithm used in blockchain technology to validate transactions and create new blocks.
DPoS is a variant of PoS in which a limited number of trusted nodes, known as delegates or validators, are chosen by the network participants to validate transactions and maintain the blockchain. This approach aims to improve scalability and efficiency while maintaining decentralization and security.
The robustness of blockchain networks can be attributed to several key properties, such as Sybil Resistance, censorship resistance and Byzantine Fault Resistance.
Sybil resistance
Sybil Resistance refers to a system’s ability to resist malicious actors who create multiple false identities, known as Sybil nodes, to compromise the network. Nodes in a blockchain network contribute to Sybil resistance by enforcing strict rules and protocols to join and participate in the network. For example, in PoW-based blockchains like Bitcoin, nodes must solve complex mathematical problems to create new blocks and validate transactions, which requires significant computational power. This requirement creates a barrier to entry for Sybil attackers, as controlling a majority of nodes would be prohibitively expensive and resource intensive.
Censor resistance
Censorship resistance encompasses a system’s capacity to prevent external forces or authorities from suppressing or altering information, as well as its ability to prevent the arbitrary exclusion of participating actors. In a blockchain network, nodes contribute to censorship resistance by maintaining independent copies of the ledger and verifying new transactions through a consensus mechanism. This decentralized approach ensures that no single node or group of nodes can unilaterally change the data on the blockchain, as changes must be approved by a majority of nodes in the network. This design makes it extremely difficult for external forces to manipulate or control the flow of information in the network.
Byzantine fault tolerance in blockchain networks
In blockchain networks, Byzantine fault tolerance plays a crucial role in maintaining the security and stability of the system. A Byzantine fault is a condition in a distributed computing system where components can fail and present different symptoms to different observers, making it difficult for the network to reach consensus on the state of the faulty component. Byzantine fault tolerance is the ability of a distributed system to continue to function correctly despite the presence of such faults.
In blockchain networks, nodes must reach consensus on transaction validity and the state of the distributed ledger. Byzantine faults, caused by malicious actors or accidental errors, challenge consensus and blockchain integrity.
The term Byzantine fault originates from the general Byzantine problem, and illustrates consensus difficulties in distributed systems. It is essentially a game-theoretic problem that describes the difficulties decentralized parties have in reaching consensus without relying on a reliable central party. Imagine generals deciding to attack or retreat. A collective decision is essential since uncoordinated actions lead to disaster. Disloyal generals may vote for sabotage strategies. And different locations and unreliable communication channels further complicate the situation.
Decentralized systems must achieve consensus despite faulty or malicious components and unreliable communication channels. Byzantine fault tolerance allows distributed systems to function correctly in the midst of such failures.
Reflecting on the role of nodes
Nodes act as the backbone of blockchain networks, providing important functions such as maintaining the distributed ledger, validating transactions, and ensuring stability and security.
The decentralized nature of blockchain networks, powered by nodes, enables non-mediated activities and transactions, ensuring that no single node or party can act as a gatekeeper or censor information on the blockchain. By understanding the roles nodes play in providing Sybil resistance, censorship resistance, and Byzantine error resistance, we can recognize the resilience and potential of blockchain technology. This paves the way for continued innovation, allowing us to harness the full potential of blockchain technology and drive its transformative impact across various industries.
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Dissemination: As an employee of Electric Coin Co., I am a long-term holder of ZEC tokens. Not legal or financial advice
