bitcoin is a finite and decentralized digital currency, it is verifiable by anyone anywhere in the world. This is the main reason why people are interested in celebrating it. No one can dilute the supply, no one can counterfeit bitcoin, it simply works as an autonomous system that cannot be interfered with. So how do you fully participate in this system to verify everything?
If you think that simply using a bitcoin wallet is enough to do it, I'm sorry to tell you that that doesn't actually make you a full participant in the bitcoin network. A wallet simply manages your private keys and helps you create and sign your transactions; it does not actually participate in the full validation of the bitcoin blockchain.
To become a node and validate transactions, you need to run additional software called a client. This software is what actually handles the processing and validation of the blocks that miners produce. The most used bitcoin client is bitcoin Core.
It is possible to interact with bitcoin using just a wallet and without running a full node, but there are benefits to using bitcoin Core yourself.
Check things yourself
When you initiate and then sign a transaction to send an amount of bitcoin, the signed transaction goes to nodes on the bitcoin network. These full nodes, some of which are miners, verify transactions and then form a race to create the next block. Miners group transactions into a block and upon completing the required proof of work, the block is transmitted to the network.
Most people probably don't care about other people's bitcoin payments, if you are not the sender or recipient of a transaction why would you care? If any transaction in a bitcoin block is not a valid transaction, then the entire block is considered invalid and is rejected by all full nodes running on the network. This means that to be absolutely sure that a payment that your wallet shows as confirmed is actually confirmed, you need to know that all other confirmed transactions in that block are also valid.
Your full node handles all of this automatically. Every time a block is found, its node automatically verifies that each coin being spent has not been spent before, that all signatures are valid, and that all other spending conditions, such as time locks, meet the requirements. spent.
When you use a wallet without verifying it with your own full node, you are essentially trusting the operator of that wallet to do all of this verification for you. Running a full node yourself completely eliminates this aspect of trust you place in your wallet provider.
The supply limit
The finite supply of 21 million bitcoins is one of, if not he, core properties of bitcoin that people think about when the topic comes up. At the center of the entire project is the idea of taking the issuance and control over the supply of money out of the hands of governments. Satoshi himself specifically analyzed the factor of trust placed in the government not to degrade the money supply as a central problem of how money works in society.
All the work a full node does to verify its own transactions is also the verification necessary to ensure the integrity of the 21 million supply limit. Every bitcoin that exists in circulation on the network right now comes from the same source, ultimately a special transaction in each block called a coinbase transaction. This special transaction allows miners to put a predefined amount of bitcoin into circulation per block.
Your node validates each of these Coinbase transactions every time a block is found. It does this to ensure that new coins put into circulation do not exceed the limitations of the predefined supply limit. Any excess above that must not be greater than the transaction fees paid for all transactions in that block. The combination of verifying that the coinbase transaction follows these special rules, as well as the fact that every other transaction only spends valid coins that have never been spent before, your full node ensures that the 21 million coin supply limit is maintained. intact.
Keep your bitcoin private
Another important aspect of why it is important to run your own node is privacy. Now, before addressing this point, it is very important to understand that privacy is a very nuanced issue in bitcoin. When it comes to maintaining privacy and preventing people you actually transact with, i.e. sending or receiving money, running a node is by no means a one-stop solution. It is a very important starting point: the necessary foundation to improve your privacy.
When you use a bitcoin wallet that is not connected to your own full node, you must trust someone else to process your transactions. To do this, your wallet communicates all the details about your bitcoin wallet to another person's node. Most of the time, this involves sending them the details of your xpub, the code that allows someone to read your transaction history and see your unspent coins. For most people, this is not a threat, but if you wish to remain anonymous, it can pose a risk. By running your own full node and connecting your wallet to it, none of this information is revealed to them.
If you value maintaining your privacy when using bitcoin, connecting your wallet to your own full node is an absolute requirement.
Without using your own node, all the other steps you take to maintain your privacy, such as coin pooling (coin pools are a collaborative transaction you can do trustlessly with other people to hide which coins they go to) are a moot point , your wallet provider can see it. your entire balance.
Why all this is important
While having your own keys is an absolute necessity to interact with bitcoin in a sovereign manner, hopefully you can now see that taking extra steps to fully validate your interactions with your own full node has additional benefits.
Without running your own full node, you rely on a wallet provider to verify that your transactions are confirmed. It is possible that this operator deceives you. They may tell you that you have received coins that do not actually exist. They might try to trick you by saying that the coins you received never arrived. You rely on them to check your balance for you, or some other third-party block explorer that learns your IP address. A full node can remove that trust.
Trusting someone else to verify your transactions for you also outsources verification of the entire bitcoin supply to the collective group of users who are actually verifying things themselves. By running your own node, you can verify with absolute certainty that the supply limit has remained intact.
Lastly, keeping your funds private is not something that can be meaningfully achieved without running your own node. If you use tools like coinjoins to hide your on-chain transaction history, this activity is undermined by using someone else's node to check your balances. Only by running your own node can you plug this gaping privacy hole in your bitcoin usage.
Having your own keys is a critical first step on your path to bitcoin, but by not taking the next step, you are making certain compromises in your interaction with the network. Once you have your keys safely stored, it is absolutely important that you take the next step.
Here are some wallets and tools to help you in that process:
bitcoin Core
bitcoin-node-with-ledger-satstack”>Ledger Satstack
