Regardless of your technical expertise, running a Bitcoin full node is ultimately fairly simple. It’s to the point now that you can order a preconfigured Bitcoin Node off the internet. This is precisely what Mrugakshee and I decided to do in January. There are a multitude of reasons why we decided to run a full Bitcoin Node. Some of those reasons are profit oriented and privacy oriented. Then there is the altruistic angle, which definitely played a part in driving our efforts. My aim is that you resonate with one or more of these reasons enough to take on the task of participating in the Bitcoin network yourself.
Terminologies
Node - Just a fancy name for a single computer that is an independent part of a network of many computers
Bitcoin Core Software - The Bitcoin codebase responsible for running the Bitcoin Network
Bitcoin Network - A large number of computers connected via running the same Bitcoin Core Software.
Bitcoin Full Node - A computer that is loaded with the Bitcoin Core Software. This computer has synchronized with the Bitcoin Blockchain, provided by other computers on the Bitcoin Network. This means that the node contains a full and complete copy of the Bitcoin ledger. It remains “up-to-date” with the latest published block.
Bitcoin Ledger - The record of all Bitcoin addresses and their balances
Bitcoin Blockchain - The record of all transactions that have taken place on the Bitcoin Network
Raspberry Pi - A fully functional microcomputer that can be purchased off the internet for about $100.
What I am Using to Run a Bitcoin Full Node
There are a couple of interesting projects that make it simple to run a Bitcoin Full Node.
Embassy by Start9 Labs
Each of these run off more or less the same hardware (a Raspberry Pi 4). For under $400, you can get set up to run any one of these nodes. My next project is to set up an Embassy Node, but for the time being, I am trying out Umbrel.
Why Run a Node?
As I alluded to earlier, we had 3 reasons.
For Profit
For Privacy
For Altruistic Support of the Network
For Profit
My Bitcoin Full Node can technically be a miner in the network. If I happen to mine a block, I’ll be the recipient of ₿6.25 or approximately $435,000 CAD. However, getting struck by lightning is more likely than me mining a block with my Raspberry Pi Bitcoin Node. Speaking of lightning though, there is a secondary network attached to Bitcoin called, The Lightning Network.
The Bitcoin Lightning Network
If all goes well, the lightning network will drastically improve the scalability of the Bitcoin network. Sending a transaction on the lightning network is close to free, (a couple of satoshis per transaction) and happens instantaneously. The actual working of the lightning network is a much more complicated topic, one that I intend on covering in a future letter.
In order for the lightning network to function properly, there needs to be lots of nodes in the network, each holding some amount of Bitcoin. There is a profit incentive here, because if my node is used to route a payment, I can receive a small amount of Bitcoin as a reward. It is anticipated that node operators can earn a modest ROI on their Bitcoin in the neighbourhood of 1-2% APY. All things considered, this is a low interest rate. However, unlike yield farming, or lending platforms, you always remain in control of your Bitcoin. In other words, you can earn a ROI on your Bitcoin in a non-custodial way.
For Privacy
When you send a typical Bitcoin transaction, you’re sending it to an unknown computer somewhere on the planet. Who knows what that computer, or company, is doing with the transaction information. Privacy matters to some, and not to others. I think of privacy as a nice thing to have when I want it, but most of the time I opt to not need it.
Umbrel comes with the ability to download a large range of Bitcoin and lightning based applications.
I’ve installed a subset of the apps that are available on the marketplace. In the future, there will only be more. The ones that are privacy oriented, is literally any lightning app (Ride the Lightning, Sphinx Relay, LNBits). Other apps can enhance your privacy in other ways, but the apps that make using the lightning network easier are definitely your goto privacy applications. If you’re using Bitcoin, it is rather simple to attribute your identity to the set of Bitcoin addresses you use. With lightning, the ability for personal information to be attributed to your lightning addresses doesn’t exist.
For Altruistically Contributing to Bitcoin
Altruism — The belief in or practice of disinterested and selfless concern for the well-being of others
There are those who profit from Bitcoin, and there are those who contribute for altruistic reasons. The founder of Bitcoin, Satoshi Nakamoto, has inspired a certain amount of altruism in the Bitcoin community by never touching their supply of 1 million Bitcoin. Early users, adopters, contributors, and enthusiasts had virtually no financial incentive to work on Bitcoin in the early days, as Bitcoin did not have a recognized monetary price for the better part of its first year. This altruism seems baked right into the ethos of avid Bitcoiners, and we would do well to replicate and spread this value throughout our communities.
I paid about $400 for my Bitcoin Full Node. I paid for it out of pocket, and I expect that I won’t be seeing that $400 returned to me anytime soon; perhaps never. The node itself doesn’t necessarily do anything useful for me automatically. I need to apply Specific Knowledge in order to reap any rewards from the system. That being said, the Bitcoin Network as a whole is one unit stronger than it would be if I were not running my node.
I, and others can take comfort knowing that my node has a complete record of the global, distributed, censorship resistant, monetary network, known as Bitcoin. Every node running the Bitcoin network is one node that would have to be forcefully dismantled in order to destroy Bitcoin. This is why it is important to have as many nodes in the world as possible. We’re all better off because of it.
Details of the Umbrel Node
I recommend checking out the Umbrel Website. They published a list of hardware components you will need in order to build your own Umbrel Node. Assembly is simple, and guides have been written if you get stuck. Finally, your Umbrel Node is likely compatible with any of the current Bitcoin wallets that you already might be using. Whether you have a ledger nano, or are using a software wallet like Electrum, you can sign and manage transactions from the Umbrel interface.
The Umbrel Interface
Once set up, you can visit your Umbrel node at a “local” url. Umbrel sets up a url that is only available if you’re connected to your home internet. That URL is https://umbrel.local
I’ve included a screenshot of what the Umbrel interface looks like. I have the ability to switch between viewing my balance in Satoshis or Bitcoin. As you can see, I have 100,000 Satoshis (1) loaded onto my Umbrel node. I am then able to use those Satoshis on the lightning network (2), or with one of the apps (3) on the Umbrel “app store”. (None of the apps actually cost money to run).
The Future is Home Computing
Whether it is Umbrel, Embassy or some other personal server, the future of privacy and personal digital autonomy is in home computing. These devices really are personal servers. Some amazing features are available such as a personal mail server, end-to-end encrypted chats, and of course Bitcoin. As privacy continues to be called into question, personal servers will become more commonplace. Think of the 1990’s, very few people had their own computers; In fact, most people simply visited their local library or university as not many people had access or know-how to set up their own home internet connection. We’re very early to this, but I believe personal servers are the next step in the evolution of digital identity and self-sovereignty.
On a side note - I will be releasing some more resources for my private subscribers come May! Stay Tuned - I think they will be quite beneficial to you all.
All The Best,
Keegan Francis