How Nodes Power Blockchain Technology
15 Nov 2018
As an emerging and exciting platform for both the world of finance and several other industries, there are many ways that blockchain technology is modernizing the world around us.
Proponents of the technology readily praise the idea that peer-to-peer decentralized solutions represent a new wealth of opportunities for businesses and consumers alike. With the blockchain industry projected by Wintergreen Research to reach as high as $60 billion USD by 2024, these avenues for innovation will likely continue to arise.
The way in which blockchain technology functions on a practical level, however, can often prove confusing. One of the most exciting and often difficult-to-grasp facets of the technology is its decentralized nature, which effectively prevents any single party from having control of the network.
From a governance point of view, this type of peer-to-peer system is able to serve as a democratic model, wherein consensus is what determines the behavior of the network. In this way, there is no single point of failure and information stored on a blockchain is able to hold integrity and serve as a shared ledger for users.
Nodes are the building blocks of decentralization
In order to facilitate a democratic platform in the way that blockchain technology is often used, nodes are operated in order to distribute information across a network. This helps to prevent a central entity from gaining control.
In this context, nodes can operate in several ways, effectively serving as network participants. The term can refer to anything from a phone or computer to several other types of electronic devices. In the modern day, nodes are often operated on specialized hardware that is able to provide the level of significant processing power that is needed to help facilitate payment networks.
That is not to say, however, that nodes can’t be run by individual users. Users are able to operate nodes through temporarily donating their device’s resources for the purpose of validating transactions and/or storing vital information on behalf of the network.
Building more nodes helps to create stronger networks and improve payment systems
According to CoinDesk, blockchains are not ‘resistant’ to compromise or attack from malicious actors, but are ‘antifragile,’ meaning they can respond and grow stronger in their wake. Here, the outlet mentions that a large network of participants is needed to achieve such a feat, as, without a widely distributed set of nodes to support a network, its benefits are minimized.
Handling transactions in a secure way without relying on a central party such as a bank or financial institution requires a large distributed network. Various cryptocurrencies are facilitated by their own nodes in order to serve this purpose. In cases such as Bitcoin, these nodes are operated by volunteers and businesses around the world.
According to a project that is being developed to estimate the size of the Bitcoin network by finding all of its reachable nodes, there are over 10,000 nodes in operation at the time of writing. More than 23% of these reachable Bitcoin nodes were found to be concentrated in the U.S., compared to just over 3.5% being operated in Canada.
Jeff Garzik, a Bitcoin core developer, called for more nodes to be operated back in 2014 in order to reap the full benefits from the underlying technology behind cryptocurrencies, and ensure the integrity of transactions.
“I agree we need more full nodes,” he said. “I’ve long been a proponent of such calls for more nodes.”
Similarly, thanks to the diverse way in which nodes are operated, it is not feasible for governments or critics of cryptocurrencies like Bitcoin to ‘shut down’ the network. Largely, this is due to the geographic distribution and sheer volume of nodes, which makes taking down a network a near-impossible task.
This was further mentioned by another Bitcoin core developer, Mike Hearn, who previously said that nodes make the Bitcoin network “‘seem’ bigger, more robust and more decentralized, because there are more people uniting to run it.”
Why Cryptanite is building nodes
As a company that harnesses blockchain technology in order to provide secure, real-time peer-to-peer payment systems, operating nodes can help increase the effectiveness of Cryptanite’s growing product lines.
Currently, Cryptanite offers a range of products including web and mobile apps, with many serving both credit and debit products for fiat currencies and the cryptocurrency market.
Through establishing and maintaining new nodes, Cryptanite will be able to offer an even wider array of tokens and cryptocurrencies for its users in the near future.
As an added benefit, the company will be able to support the mission towards improved decentralization that many blockchain teams and cryptocurrency advocates hold as a core value.