Your own bitcoin node: why and how to run it

Bitcoin is digital gold because it’s decentralized, but what makes it decentralized? People like you, running nodes of the network and making sure transactions are validated and written into the blockchain in a truly decentralized and global fashion.

But there are more benefits of running your own bitcoin node than just the virtue of keeping the bitcoin network what it’s supposed to be. You can take full control of your bitcoin transactions and run your own little bitcoin hub for you and your family from the comfort of your home. The amount of effort and money you need for that is pretty low.

What is a bitcoin node vs. miner

In blockchain, nodes are computers validating transactions and broadcasting them to be recorded into the blockchain. In bitcoin, as well as some other blockchains, there is a difference between a validating node and a miner: while nodes only validate transactions as compliant with the blockchain’s rules, miners also record them into the blockchain – and receive a reward for that (that’s how new bitcoins are being created).

Bitcoin mining these days requires significant investment into specialized hardware, as well as electricity bills – these machines consume a lot of power, and you need to constantly cool them down, too. Maintaining a node, on the other hand, doesn’t cost that much and also does not reward you with new bitcoins – but it helps you keep your financial sovereignty on the maximum level.

A full node downloads and stores a copy of the entire blockchain, down to the genesis block and the very first transaction. It validates all incoming transactions and blocks and enforces the bitcoin consensus rules: the supply cap of 21 million bitcoin, how new coins are issued and how double spends are prevented.

A lighter version, which is called a pruned node, saves memory space by deleting old blocks. Then, there is a so-called light node, which only downloads headers of the blocks and relies on other, full nodes. In this article, we will be talking about full nodes.

Why run your own Bitcoin node

A node is essentially an intermediary validator that passes transactions to miners so they can add them to the blockchain. You can configure your wallet so that your transactions go through your node – this way, you won’t rely on any companies to process them.

It’s the most private and secure way to process your transactions: when your wallet connects to someone else’s server, they can see your IP address and your extended public key (XPUB), so whoever is operating the node can link your IP to all your transactions. Relying on your own node means you keep all that data to yourself.

You can also do some other fun stuff:

• participate in CoinJoins with maximum privacy;
• buy and sell bitcoin on trustless p2p marketplace like Bisq;
• receive payments in a private fashion via PTC Pay server;
• run your Lightning node like a pro;
• get information on the state of the network and look up wallets while getting data directly from the blockchain.

You can also use your bitcoin node to do things not directly related to bitcoin, like taking advantage of decentralized data storage solutions with InterPlanetary File System (IPFS), managing a nostr client for a decentralized analog of X, and more.

Bitcoin node hardware

So where to start? Buy some hardware – luckily, you don’t have to spend a whole lot of money on it. In fact, you can run a bitcoin node on any computer, however, doing so will most likely turn it unusable for anything else, so it’s more practical to buy a separate device.

The easiest option is to buy a ready-to-use node with pre-installed code, and there are a bevy of them on the market now: Umbrel, MyNode, Start9, Nodl. The price tag for these starts at $500. This is the fastest and easiest way, however, you would need to trust the hardware maker to install the right code on the device (not that trustless!) – and you won’t get the full DIY experience.

A cheaper and more hands-on option is to buy a mini computer and install the bitcoin code on it yourself. These machines cost $200 – $400 on average. Some old bitcoiners told me HP EliteDesk Mini does the job pretty well, but there are also other options. Keep in mind that you’ll need 64 GB of memory to run the code and about 2 TB to store the blockchain data – you can also buy SSD cards for that separately. And if you want to go full DIY fun mode, take a look at the Raspberry Pi or RockPro 64 mini computers – these can cost as little as $50.

General hardware requirements:

• vCPU Core 2Ghz (boost),
• 4 GB RAM,
• Ethernet port.

Bitcoin node software options

When you get your hardware, if it’s not a pre-installed out-of-the-box solution, you’ll need to install the bitcoin software on it. There is a range of open source clients you can use: Umbrel, Start9, ezNode, myNode, RaspiBlitz, RoninDoJo. You can read more about each one in this Bitcoiner.Guide article.

You would need to flash your mini computer or 64 GB memory card with the software, then fire up your node. Freedom Lab NYC provides some handy step-by-guides for setting up your Bitcoin node using the Umbrel, StartOS or doing it the hard way and compiling the Bitcoin Core software from source code (only for advanced bitcoiners).

This process requires patience: sometimes, things don’t work right away and you need to erase, reboot and start from scratch. Don’t lose faith, have fun with it! After you get your node up and running, give it time to download the bitcoin blockchain and synchronize with the network. It may take several days at this point – the bitcoin blockchain has gone a long way since 2009!

Benefits of running a bitcoin node

Alright, you did it, now what? You just joined the global community: there are currently over 25,000 bitcoin nodes running around the world, according to Bitnodes. If you check the link, it also shows the global Bitcoin node distribution map, however, most nodes have no geolocation. That’s a feature, not a bug: the best practice is to connect bitcoin nodes to the internet via Tor to maintain privacy of their owners, so you definitely should pay attention to that while setting up your node. Unless you want to intentionally put yourself on the global bitcoin node map!

The most important thing you can do once you’ve got your bitcoin node up and running is to connect your wallet to it – check your wallet app’s settings to do it. These ways, only your node will know your IP, wallet and transaction details. If you are the lead bitcoiner of your family helping everyone else to figure it out, you can also help them connect their wallets to your node, too. And if you want to anonymize your transactions with CoinJoin, running it via your own node will definitely ramp up your privacy.

If you want to use Lightning and not rely on any intermediaries to open your channels, you can connect your Lightning node and your bitcoin node for a maximum trustless setup. To be clear, you can run a Lightning node without running your full bitcoin node, but that way, you would rely on other people’s nodes to connect to the bitcoin blockchain.

You can also use your node to receive bitcoin payments in a private fashion, without publishing your wallet address: set up a BTC Pay server so that it generates a new address every time someone wants to pay you through your website.

You can run your own blockchain explorer and look up data on wallets and transactions in the most self-sovereign fashion: check Bitfeed, Bitwatch and Mempool.

The more you try, the more you learn – once you get your bitcoin node running and familiarize yourself with the game, you might discover a lot of other things you can do using the same hardware. For example, running your own podcasting or streaming server, collaboration tools, decentralized storage, social media client and even your own, private instance of ChatGPT – check out Umbrel’s app store to get a glimpse of what’s possible.

And if it’s hard in the beginning and a little buggy, and needs some work and fixing in the process – you know you’re doing it like a real bitcoiner!