Within the realm of Bitcoin infrastructure, there is confusion around the terms miner and node. While they are one and the same, a clear distinction must be made between running the Bitcoin node software and operating a node.
What’s the difference between a Bitcoin miner and a node?
By simply running the Bitcoin node software, you contribute nothing to the network and do not meet the Bitcoin whitepaper's definition of node.
Based on the white paper, among other requirements, nodes are characterised by their production and dissemination of valid blocks.
We find these instructions in chapter five of the white paper. It is these instructions that outline the core activities a node must perform to validly participate in the network.
The steps to run the network are as follows:
- New transactions are broadcast to all nodes.
- Each node collects new transactions into a block.
- Each node works on finding a difficult proof-of-work for its block.
- When a node finds a proof-of-work, it broadcasts the block to all nodes.
- Nodes accept the block only if all transactions in it are valid and not already spent.
- Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash.
What makes a Bitcoin node?
These instructions incentivise nodes to find ways to scale the network efficiently in a way that rewards the most honest, open and capable participants. It is these incentives that ensure the long-term integrity of the network, its security and drive its growth.
As you can see, there is a pretty clear distinction between a node and those that run the open source Bitcoin SV node software, yet do not perform the responsibilities of block publication and proof-of-work that is necessary for the network to operate.
Bitcoin mining was designed to grow into an enterprise-scale venture
Ultimately, these nodes are enterprise level systems. While anyone is allowed to operate a node, to do so effectively requires the usage of server class hardware, high bandwidth Internet and access to application specific integrated circuit machines (ASICs).
These ASICs perform the energy intensive process of generating the proof-of-work, which signals that the blocks being proposed by the node are worthy of being considered for addition to the chain.
The proof of a Bitcoin node lies in the proof-of-work
The proof-of-work process involves the running of an algorithm that rapidly attempts to solve a low probability puzzle effectively via random brute force search. A node uses the candidate block header as the input and directs ASICs to hash it to check whether the hash value is below a target. If not, the ASIC changes the nonce in the block header and reattempts. Once the hash value is below the target, the block has been successfully mined.
The difficulty of this process is adjusted to limit the rate at which new blocks can be generated by the network. Due to the very low probability of successful block generation, it is impossible to predict which computer will generate the next block. The low probability of successfully finding valid proof-of-work solutions further reduces the likelihood that two or more nodes generate a block around the same time.
In order for a block to be eligible for addition to the chain, the broadcasting node must demonstrate valid proof-of-work for the entirety of the data in its proposed block. It is this usage of proof-of-work in the mining process, which serves as a demonstration of the investment in energy and equipment that was made by those proposing a block. It is this demonstration that affirms to other nodes that a block is worth validating in this way.
Bitcoin incentivises investment in the network’s infrastructure and honest participation
Proof-of-work acts as a gating function, creating an upfront expense to any attempt of suggesting a new block to the network. Subsequently, it is a waste of resources and time for a node operator to propose an invalid block as would be easily noticed and rejected, with no chance for the operators to recoup their investment in proof-of-work.
Ultimately, it is the proof-of-work that creates an incentive for nodes to only propose honest blocks. Just as importantly, proof-of-work is an open system available to participate in by any who desire to process transactions on the Bitcoin network, provided they are able to invest in the resources necessary to compete successfully.
An introduction to Bitcoin infrastructure
If the topic of Bitcoin mining and infrastructure is within your professional purview, you’ll benefit from the BSV Academy’s introduction to Bitcoin Infrastructure course.
This certificate course is focussed on providing students a solid understanding of the role that nodes and node operators play in the construction of the network. In particular it focuses on the incentives that drive enterprise operators to spend large sums of money to build and operate their infrastructure.
To sign up for this free course, head over here.