Cryptocurrency transactions, unlike those conducted in traditional banks, operate through a decentralized network of nodes.

What are Nodes?

A node is any device, usually a computer, that is part of the blockchain network. Nodes are responsible for verifying and validating transactions, as well as storing a complete or partial copy of the blockchain's ledger.

There are different types of nodes:

  • Full nodes: These nodes have a complete copy of the entire blockchain, allowing them to validate and record transactions on their own. Each time a new block is added to the chain, these nodes receive it and update their copy.

  • Light nodes: These nodes do not store the entire blockchain, but only a portion of it. To verify transactions, they rely on full nodes, which allows them to operate with fewer resources.

Anyone can set up a node. However, participation depends on the type of blockchain. In networks such as $BTC or $ETH , nodes are run by individuals or organizations that want to contribute to the network in exchange for financial incentives or for ideological reasons, such as keeping the system decentralized.

In Proof of Work-based systems (such as Bitcoin), these nodes may be operated by miners who validate transactions in exchange for rewards (new bitcoins). In other systems, such as those based on Proof of Stake, nodes are run by validators who stake their cryptocurrency as collateral to validate transactions and maintain the security of the network.

Transaction Process

  1. Creating a Transaction: When you send cryptocurrency, you create a transaction that includes:

    -The recipient's address (similar to a bank account number).

    -The amount of cryptocurrency to transfer.

    -Your digital signature, generated by your private key, to authenticate the transaction.

  2. Transaction Broadcast: Once created, the transaction is sent to the network of nodes, which is responsible for reviewing it.

  3. Validation: The nodes check that:

    -The sender has the necessary funds.

    -The digital signature is valid.

    If everything is correct, the transaction is valid. In systems like $BTC , validation may involve the mining process, where miners compete to add the next block to the blockchain.

  4. Block Inclusion: Validated transactions are grouped into a block. A block is a kind of "page" in the blockchain that contains several transactions.

  5. Confirmation: When the block containing your transaction is added to the blockchain, it is considered confirmed. Additional confirmations come when more blocks are added after yours, which increases the security that your transaction cannot be reversed.

How are Nodes Linked and What Makes Them Different from a Bank?

In a traditional banking transaction, a bank acts as a central intermediary, verifying and approving all transactions. The bank has full access to the records, giving it complete control over users' accounts.

In contrast, in a blockchain network, there is no single centralized entity. Instead, distributed nodes verify transactions together, ensuring that there is no single authority controlling or manipulating the system.

This makes the blockchain more secure and transparent, since:

  • Decentralization: No single node has absolute control. Everyone must agree on the validity of transactions.

  • Immutability: Once a transaction is confirmed and recorded on the blockchain, it cannot be modified or deleted.

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