The Russian Roundup Presents: NODES 101 FOR DUMMIES #4
Once again we are back with another article in our for dummies series which covers many different aspects of the cryptosphere and as emphasised in the previous article with the markets for better or for worse we are still going to continue creating content.
If you are in severe drawdown I’m personally telling you, crypto will recover. Even though it may not look good, focus on education and where you went wrong and go back with a different mindset. These articles should help!
What Are Nodes? 💻
Understanding the overall way that blockchain works will give an insight into what nodes are but essentially, blockchain is peer-to-peer meaning that transactions don’t go through any intermediaries, they go through code, validators to verify or deny transactions. This is key ground information to understand the logistics of nodes.
Nodes essentially are the systems or the devices which are connected to a specific network to complete tasks like storing, receiving and creating information.
This may seem like heavy tech talk so to simplify it:
As I said in the explanation, nodes are the systems or devices which validate and receive transactions that are needed to maintain the consensus of the network which may be proof of stake or proof of work depending on the format of the project and other factors.
Coinmarketcap gave this explanation which I thought was impactful:
‘A blockchain node’s main purpose is to verify the validity of each succeeding batch of network transactions, called blocks. Each node has a unique identifier attached to its device that allows it to be distinguished from others in the network.’
Why Are They Important?🙋
As explained, blockchain doesn’t have one governing body controlling the network and due to a large number of blockchain participants, there needs to be a “consensus” that needs to be followed for full nodes to enforce rules and validate transactions.
It might sound repetitive however the complex nature of blockchain requires emphasis.
A key thing to look out for with nodes is the fact that they relay a level of on-chain ‘governance’ and in a scenario where the “51% attack” occurs which is a situation dependent on half the network being tied to a singular entity. This can lead to network foul play and corruption which can lead to a monopolisation of the network forcing users to comply with an individual or an organisation's rules.
Examples Of Node Projects 🗺
As the trend grows of setting up nodes for passive income it’s important to clarify whilst being a great passive income stream, there are a lot of projects that are rug pulls. Always check the contract and always look at investments with a critical eye.
As difficult as it was to make this article as self explanatory as possible, it’s important to remember theres alot of heavy tech behind blockchain nodes and you should spend time making sure your project has the tokenomics for it to make sense.
As scary as nodes can be, once understood they can be great ways to secure passive income.
I will give an example of a few accounts you can follow to get a better insight into nodes:
The best way to learn crypto is by getting information from multiple different sources and The Russian Roundup has no shame in admitting that and exchanging mediums of education!
As a reminder this is not a trading signal, it is an opinion and each trader/investor should know and understand the risks attached with trading. At no point should this be regarded as financial advice.
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