Bitcoin Q&A: Why running a node is important

“How important is it to be running
a full node as a user of bitcoin?” It is important to you, as a user of bitcoin. If you want to know if a transaction has been confirmed,
[especially] if you have received a payment, there are two ways to find out. One way is to [access] a block explorer [by] typing in
“,” “,” “,” or one of these other blockchain explorers. That tells you they think, [or want you to think],
that the transaction has been confirmed. You only know that if no one has hacked them, there isn’t a bug in their [node is]
producing misleading information, they haven’t decided to directly mislead you, or your own computer and browser aren’t
compromised [to] display false information. [Using a block explorer], you don’t really know
if the transaction has been confirmed . If you then use that information to make
decisions, [especially] expensive decisions… [such as] letting someone [who supposedly
just purchased your car] drive off with it, because a block explorer said they have paid
you and there has been three confirmations, you are delegating the responsibility [for validation]. The trust model is broken.
You should not be delegating that responsibility. You should use your own node that you properly [and
independently] configured [to] stay within consensus, properly upgraded to the software version and
types of capabilities that you feel comfortable with. You should ask that node [whether you have received
a payment]; it will give you an [independent] answer… based on its own evaluation of the consensus rules. Can most users [currently] do that? No. [But] certainly [people] who are running
companies need to [run their own node]; people who are [developing and servicing]
wallets with a lot of money need to do that. Most users won’t, most users are using lightweight
wallets, but they do so at a cost to themselves. The cost is certainty [about their transactions]. That doesn’t mean it is not also an issue for the rest
of the network [if you are not running a node]. It is not only good to run a node for your own
reasons, but more people running nodes… [to] check if a transaction has been confirmed and [basing] economic decisions on that, is meaningful. If you are simply running a node on Amazon Web
Services, where it costs you $15 to [set it up], that does nothing because it is
on infrastructure you don’t control. It doesn’t really do anything. Maybe paying for some
of the bandwidth will help [new] nodes to bootstrap, but your control over that is very limited. It is important, if you have the ability, to run a node on
your own [internet] connection, your own hardware… in the security of your own home or office. If you can run it with a satellite feed, even better! If you can reconcile what is coming from
the satellite with the internet, even better! You [would] increase the resilience and robustness of
[yourself and the Bitcoin network]. Do it for principle. But again, not many can do that. Max asks, “Is it more important to have decentralization
among miners, nodes, or both? Why?” It is important to have decentralization in every aspect
of Bitcoin. Centralization is a point of weakness, a point of potential failure, corruption, and take-over. When we [talk about] decentralization of miners,
we [need] to think of it in three very distinct ways. Maybe even four different ways. First, the manufacturing of mining hardware,
specifically the high-end, cutting edge… 16 to 12 nanometer silicon fabrication of ASICs. Centralization in [manufacturing] can
drive centralization in the [other areas]. Next, the ownership of mining hardware itself. The mining “farmers,” or miners who own the
mining farms, if you want to call them that. What we mean when we say “miners” are
the people who own mining equipment. If only a few organizations own mining equipment
and control how it is being used, that is a problem. Then there is decentralization of mining geography. Even if the mining equipment is owned by
lots of [different] people [or organisations], if it is housed in only a few locations, in terms of
the same warehouse or same geographic vicinity, that is a problem. Right now, a very large percentage of the mining
equipment, while controlled by many miners, is located primarily in two provinces of China. Geographically, that is not good. Finally, mining pools, where multiple miners spread out
their gains and smooth out the probability distribution… of finding blocks and reward. We need decentralization in that. Among miners, we need decentralization in
manufacturing, ownership, geography, and pools. We also need decentralization in nodes
and the types of nodes [people run]. Nodes used by individuals to run wallets (as I do),
nodes used by intermediaries for merchant services, nodes used by merchants to run e-commerce sites,
nodes used by companies to run wallet infrastructure, and nodes used by exchanges. All of those need to be decentralized; we need as
many of those types to run, in as many geographies, through as many [different types of connections]:
internet, dial-up, leased line, microwave, satelitte… Whatever else we need to use.
Frequency-hopping spread spectrum (FHSS). Decentralization everywhere is the key here;
decentralization in as many places [as possible]. Of course, these things will ebb and flow over time.
We will see some areas become more centralized, then become more decentralized again,
then perhaps re-centralize. [These areas will not] all move in the same
direction at the same time, which is a good thing. Changes in technology, operational models, profitability,
supply chains, will affect decentralization [tendencies]. For example, in the manufacture of ASICs, the
biggest change that has happened [recently] is, we finally caught up to Moore’s law and
[now] we are right at the front end of that, which slows down the incremental improvements
in mining capability and performance significantly, by orders of magnitude in fact. That changes the dynamics of the supply chain. Now you can actually ship [those chips]
and it will not be obsolete by the time… it arrives [at its destination]
a thousand kilometers away. You can put it on a container ship
for two months and it [will] still be… useful hardware after [those] two [shipping] months. This changes the decentralization of ownership and
geographic [distribution] of mining equipment. Sometimes we will have external shocks to the system,
[such as] if a country starts cracking down [on mining]. When Venezuela bans mining or requires everybody
to [apply for] a license… it’s a trap! Don’t get a license. They will find you! But when Venezuela [does it], that wouldn’t
have a big impact [on the whole network]. If China was to [ban mining or require licenses],
that [could] dramatically change the economics. It would make centralization of
mining an [obvious] disadvantage. It would actually lead to decentralization
of mining, if that happened. Lucas asks, “Is it possible to run a Lightning
node for a few hours a day, like a full node?” “Does shutting down a Lightning
node disrupt Lightning [payments]?” Yes, it is possible to run a Lightning node only part-time. If you [want to] shut down your node and
have outstanding channels that are open, you [may use] a [watchtower] to monitor for
channel closure [if you plan to be offline… for longer than the timeout period], to make sure [the
other participant in the channel] doesn’t try to cheat… by broadcasting a prior state. One of the interesting innovations in the Lightning
protocol, [which was developed] after the original paper, was a great contribution by Thaddeus Dryja
and Olaoluwa Osuntokun. They implemented the ability to give a third-party a role
to monitor for cheating in Lightning payment channels. The only way you can cheat in [certain payment
channel designs] is by re-transmitting a prior state… which has been revoked, [in order to get] a more
preferential balance on your side of the channel. [For example, you could] pretend that you haven’t
actually spent some of that money in the channel. There is a way to protect against that in Lightning. If you try to do that, the other person being cheated
has the opportunity to [use a revocation key]… and transmit a countervailing transaction. While you are waiting to get paid from your cheat
transaction in three days [due to the timeout period], they can immediately take the money. Not just the money that you owe them,
but the entire balance of the channel. It is essentially a scorched-earth policy, where you
are punished for trying to cheat by losing everything. To do that, they [must] be online to catch
you cheating without the timelock period, when you are waiting for a confirmation. If you are running a Lightning node part-time
[and plan to be offline longer than the timeout period], you will need to transmit those revocation states
to a third-party who is running [a node] full-time. If they see someone trying to cheat, they will broadcast the punishment transaction to wipe
the channel [in your favor], save you from being cheated, and punish the transgressor. The best part of that function is the innovation
which [prevents] the third-party [from knowing]… what channels you have open or how
much money you have in those channels. They will only know if they see a cheat. That is
very cool. So you can run a Lightning node part-time. It is [factored in to] the design, with the ability
to [invite] a third-party to do the enforcement. Anonymous asks, “How can a non-developers
[become] involved with Lightning [right now]?” If you have experience in user interface design,
you can definitely [become] involved in Lightning. If you don’t, then you can download some of the
existing Lightning wallets and start using them, seeing where they work and don’t work [for you]. Today, you [can only] use them
on test-net, but that is okay. Help with testing and give feedback to the developers. Ultimately, a Lightning wallet [should]
look like a [regular] Bitcoin wallet. [Eventually], it should not be necessary for
you to know where the payment you made… was with or without SegWit, using Lightning or on
the base blockchain [to a regular] bitcoin address. It should not matter. You will basically scan a QR code,
click ‘pay,’ and it tells you how long [until confirmation] and [how much] it will cost [in terms of fees]. You, may notice some of your transactions
are much faster and cheaper to execute. Those are the Lightning transactions. [Other] transactions are slower and a bit more
expensive; those are SegWit transactions. Some are very expensive and slow;
those are [legacy] bitcoin transactions, on a blockchain that is probably congested. [If the interface design is good,]
that is the only indication you should get. Your wallet [does not need to] tell you
how many channels you have open… or who [you have] those channels [with],
unless you go into some advanced setting. All of that should be invisible to the end user.
It should be usable like a [regular] Bitcoin wallet. Not all of the Lightning wallets are like that. Most of them are designed by (and for)
[developers and] engineers at the moment. They show a lot of background detail and are not
very user friendly. Check out Eclair and Zap wallet. Have a look at some of these wallets as they come out.
Help with testing and give feedback [to developers]. I think that can be enormously helpful. If you are a graphic design or user
interface designer, even more so! Paige asks, “The white paper emphasizes the need for
honest nodes to control the majority of the CPU power.” “Is there a way for me, as a non-technical
person, to help secure the Bitcoin network?” No, there isn’t. That aspect, which is the mining function,
requires you to have significant processing capability. It is managed entirely by specialised ASIC chips [now
instead of] CPU, which [can be] difficult to source. At the current level of competition,[mining] is a viciously
competitive game that requires [significant] investment. You can dip a toe into this pool, [but unless] you have
$50 million to spare [to] hire some very technical people, the average non-technical person cannot
help secure the network through [mining]. But they can help secure the network by running
a node at home, to validate [your own transactions]… and to see if [you have] been paid, [or to
help new nodes bootstrap] for example. Maybe by connecting to a satellite dish. Certainly by choosing very carefully which software
to run, what types of wallets and exchanges to use. Use [wallets and other software that] align
with [your] own principles. That is very powerful. You can [have a great effect] just through your choices
as a consumer, and by running a node at home. It is also a good learning experience.

50 thoughts on “Bitcoin Q&A: Why running a node is important”

  1. Thank you for this Q&A session!

    With regards to running my own node to verify incoming transactions, do I still not need to wait for miners to validate the blockchain (six times or so) before it is 'confirmed'?
    Could the transaction fail, during the 'pending' time on my node, or am I mistaken?

    Thank you.

  2. Andreas, you're a superstar!

    Thank you for your continued support and advocacy for an open and decentralized financial system for everyone.

    Cheers ?


  4. I understand that it's "safer" or more reliable to run your own node if you want to check your own transactions but……. if something does go wrong, what could we do anyway?

  5. Word of warning : Nodes use up a lot of Bandwidth (even at 1 Mb). Just running it 6-10 hours a day is okay if you have limited data. It could eat up a lot of GB over the course of the month.

  6. Are you willing to discuss this topic with Craigh Wright publicly? I would be interested to see a discussion between both sides.

  7. How will all lightning payment remain cheap? If many node will be required (hopefully) to operate the network it means your transaction might need to make through a few of them to get on chain. And so every hop on the network would mean some transaction fee (can't think of any other way). How will that part remain low in cost, or will that be the same path we made with the base bitcoin chain: cheap in the early days and when it starts to get attention everything skyrockets?

  8. It sounds like for my e-commerce business to be able to accept payments 24/7 on LN I need to basically pay and run my own server or subscribe to some kind of cloud service like azure to run my node 24/7 uninterrupted? I don't think running a raspberry pi on my home network is going to cut if I want to have Enterprise level payment processing. I don't want to miss payments.

  9. The Deep State could confiscate the crypto algorithm or invalidate the algorithm. Cryptos work via an algorithm with a source code. Our corrupt Deep State has ways to either confiscate or invalidate these crypto algorithms. Where is Monero without a working algorithm? True or false?

  10. what I dont get is if the network needs to be descentralized as most as possible, why bitcoin allowed ASICs which is a much more expensive and harder equipment to get rather than GPUs in order to secure the network…

  11. Hi Andreas, Don't you feel that confidential and anonymous tech is backwards in Bitcoin? should'nt the features in LN be with the biggest transfers, and microtransactions not require so much technology?

  12. Very interesting, not sure that companies will host nodes with their own hardware though.
    Also the audio quality could be better, it sounds like sound is captured from your laptop's microphone and not from the on your shirt. Or maybe you're in a small room with no furniture?

  13. Andreas how much consensus do nodes have over miners? Do miners have any say in consensus or are they there only for a bitcoin reward and processing transactions?

  14. As usual, great video. Would you be able to cover GDPR and how it could affect blockchain technologies that hold customer information? It's just around the corner and I'm wondering if anyone in the blockchain / crypto space has considered it. Apologies if you've already done a discussion about this.

  15. New to the space and to your channel, fantastic content though my friend! I see why you get donated the big bucks. I am looking to build a network of informed crypto YoutTbers on WildSpark. If I AMP your content would you be interested in signing up to receive free AMP from Synero? Regardless, thanks for the vids and I look forward to learning more from you!!

  16. Any way to make money running a node? What's daily bandwidth of running a node after you have blockchain downloaded? What size hard drive do you need? Any cheap hard drive fine?

  17. Hey Andreas, since you are the guru on this subject, do you think the ISP will be able to develop a bandwidth shaping technology (as they have done with the internet) to control the speed of the bitcoins LN transactions on the TCP layer of the Bitcoin Network ???

  18. Anybody have a good video for setting up a node for the non-tech folks? I see a lot of comments here, including my own, where people are asking how to set up a node. For me to use it, it would have to be pretty idiot proof. 🙂 I had to Google what a raspberry pi was.

  19. QUESTION: If you have little tech skill, i.e. don't use command prompt to solve issues, how do you set up a Bitcoin Node? I have the hardware (a computer with plenty of disk space) and downloaded the Bitcoin block chain but could not get the node to work, I think the problem was getting my home machine to be a static ip. At least I think that was the issue. I am pretty sure it had to do with my internet connection not talking back to the block chain. I spent a lot of time on the Bitcoin Core website looking at posts and I am pretty sure it is the internet ip that is the problem. I could not find any solution simple enough for my tech neophyte brain to handle.
    I know that nodes are critical to the infrastructure of Bitcoin and other crypto and if you want to be more than a sideline investor and you are a true believer, which I am, you want to help and be a part of the infrastructure. The problem is it seems there is no "black box" solution I can buy on Amazon that will set up a node and solve any connection issues. I am surprised this has not been built. If it has please tell us about it. If not please help. 🙂 If we could get a Bitcoin Node set up the next goal would be a Lightning Node.

  20. I've spent about 50 hours desperately trying to get more than 8 connections on my node but still can't figure it out…. I'm giving up.

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