A node is essentially a mini-computer that runs the coin software and keeps a local copy of the ENTIRE blockchain. It broadcasts transactions, verifies the coins you receive are legitimate and maintains your privacy by allowing you to participate without reliance on anyone.
When you connect your wallet to your node, you are not trusting anyone else to verify your transactions, and if you do not have your own, you are trusting in someone else’s node to tell you your balance and to broadcast/receive your transactions for you.
This generally happens in the form of a UI/Suite of your preferred wallet.
Why run a node?
Some people will say that the only reason to run a node is fully altruistic and you are providing a service for the security of the network essentially for free.
This is not the case.
Even though you will not get any real monetary rewards from running a node, you have a LOT of other incentives to do so, all in the form of extra features and benefits you are able to take advantage of.
The first advantage is that full nodes offer the highest degree of privacy.
When you use a centralized wallet, like the TREZOR or the Ledger, you have no privacy. They know exactly all your public addresses, all your balances, all your past transactions. When you have your own full node that you run yourself, all that happens locally. No one looking at your traffic can see any of that, making it much more difficult to link it to you and doxx you.
The second advantage is that full nodes offer the highest degree of security
When you have your own copy off the blockchain locally, you don't need to request that information from your centralized provider and trust them to keep their nodes honest. You are enforcing the rules yourself and not relying on someone else to do it for you.
The third and last advantage is the overall health of the network.
Decentralization is good. The more the better. And the way you achieve this is by running your own node. The more nodes in operation the safer the network is.
Also, nodes help the network by sending blocks and transactions to other full nodes to help them sync, and it services data requests from lightweight wallets, helping people that don't run their own nodes yet.
On top of that, more nodes, spread more widely, make any sort of attack harder, less likely to fall to censorship.
There is another advantage but will be very blockchain dependence, and that is governance.
Nodes are ultimately responsible for enforcing the rules, so you have a say on what upgrades and changes are made.
You can look at the Bitcoin Block Size Wars and to Taproot to see examples of governance in action.
When to run a node?
Do you have a hardware wallet? If so you probably have a fair chunk of money in a crypto ecosystem.
In that case, you should be running your node
Very few things are gonna be more valuable (not profitable) than doing this.
A full bitcoin node based on a raspberry pi 4 will set you back about ?200. That is a small price to pay for the benefits, and we routinely drop similar amounts on wallets.
This is much better than another wallet.
The amount of technical knowledge you will need to get it up and running is minimal, and to take advantage of all the features you will always have plenty of other node runners ready to help you.
So just go ahead, run you own node. The sooner you do it, the happier you will be.
