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Many of us have heard about mining cryptocurrency and about the process of mining being highly profitable. Some people are even building careers of crypto miners since the revenue from mining is bigger than the salary people receive each month. One bitcoin equals around ten thousand dollars, so you can imagine how profitable mining can be. But not everyone knows how does this process works and what are the details.
Everyone knows - bitcoin operates on a decentralized system. But how does the system is operating and what are her components. For instance, it needs a huge network of machinery, but it is not the only thing needed. When there are so many transactions within a system, they have to be secure. No one has to be able to use one coin twice, this is why a number of nodes selected randomly are used. In this article, you will find out about nodes and why are they used.
What is a Bitcoin node used for?
To make it clearer, it’s just a computer. This machine has a bitcoin program running, and it is connected to other machines within one network. All machines which are connected run this specific program. Each of them has several tasks to complete and it’s important for the network overall.
Mainly they are used for verifying the transaction is correct and it was made due to the rules. They are also used to pass information about transactions and they keep copies of all transactions had been confirmed. This is why the system is transparent and safe, no one will be able to use the same token twice.
But what is a full node? You might have already come across such a term. It is also a machine (or PC) runs a program which validates not only the operations made by users, but it also validates blocks. They complete similar tasks – accept transactions (and blocks) and pass them to other full nodes in the system.
What is the role of a node?
They have several tasks:
• Each of them has some rules which they have to follow. Imagine a situation where those PCs are programmed to verify transactions. They might be verified or declined. If it does not match the requirements, PC declines it. If everything is OK, the operation is approved.
• Sharing information with other computers. The computer has to share information about all the transactions. Typically, the shared information can be divided into two main groups – transactions made recently, and operations already confirmed. The latter group is already copied and such blocks of data are not shared individually, only within blocks. As you already know, full nodes are sharing such blocks.
• Each node has to copy the transaction. But not just any transaction, only those which are already confirmed. These confirmed transactions are stocked in a file. The file is called a blockchain.
These nodes play a very important role in granting the safety and transparency of all operations. It’s highly difficult or almost impossible to replace something in a blockchain since this operation will be noticed. No one is able to hide the fact there were changes within a blockchain – everything is copied.
When nodes are adding new transactions to the system, the process is called mining. The system of these nodes is completely decentralized. All computers have the same tasks but the program on each computer is making its own decision. There is no other “centralized” system or algorithm “tells” these programs what they should do. This feature makes the network very powerful.
You also should know, if you are investing in the coins, you don’t have to be a node. Meaning, if you want to buy services using coins, you only need an electronic wallet compatible with cryptocurrency. When you confirm the action, nodes will add this transaction and it will be available for mining.
You need to understand - a node is a computer, but it runs a specific program which can verify operations, pass them to other computers with a bitcoin program, and it copies them when they are confirmed. The process of verifying and sharing is called mining. You don’t have to buy and install the program if you are only interested in buying some services using cryptocurrency. Basically, you need only a crypto wallet if you want to hold the coin and make purchases.