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How To Operate And Control Your Own Bitcoin Node

The value of a cryptocurrency is determined by how safe its network is. The security of Bitcoin is based on its ability to verify and validate genuine transactions in the nodes operating in its network. However, with Bitcoin, it takes a lot of time and resources to verify transactions in each node. This disadvantage was made clear in 2017 when Bitcoin’s blockchain became overwhelmed by lots of transactions that were being carried out at the same time. This led to the system getting clogged. Consequently, lots of delays were experienced when it came to processing transactions. Click Here To Go Straight To Our Online Tutorial

To deal with such problems, Bitcoin was divided into two networks: lightweight nodes and full nodes. Lightweight nodes can process transactions much faster than full nodes. The reason as to why it processes transactions faster is because they don’t download the full transaction on the blockchain. In case a transaction is downloaded, then just the header and any other information that’s relevant to the transaction are downloaded. This helps to speed up the transaction. Validated Bitcoin nodes confirm that all the transactions that are taking place within the blockchain are genuine. The nodes download all the transactions on Bitcoin’s blockchain and fully authenticate them.

The benefit of running a mining machine includes the coin rewards that you will get. This is in addition to any gains made on the coins when their value goes up. You will not be paid for running a full Bitcoin node. However, you will get to enjoy some other benefits. For instance, your transactions will be more secure. This is particularly essential if you are planning on carrying out multiple transactions a day. Also, you will make the entire Bitcoin network much more secure. Since a full node downloads all the transactions, it will always have the latest information about anything that’s related to Bitcoin’s blockchain.

If you’re an investor, then full nodes have two purposes: first, they will help monitor how healthy Bitcoin’s network is. The health of the blockchain is quite vital as it has a direct relation to the price of Bitcoin, considering that it’s the blockchain where transactions are carried out. Also, it will make the cryptocurrency much safer to use, therefore, ensuring that investments are safe. Secondly, it makes sure that only valid and accurate Bitcoin transactions take place.

How to Set Up a Full Node

It’s not that difficult to set up a full node.

There are three ways to go about it:

In the first method, you will have to run the full node in the cloud. This requires that you sign up for an Amazon Web Services or Google Cloud account. Then create a Virtual Machine (VM) so you can accelerate connection and sync to the cloud from your PC. Make sure the firewall rules have been properly set up. You will then need to download Bitcoin Core. You need this program to run Bitcoin and set it up by configuring the right port settings on your computer to the cloud.

The second method is similar to the first method, except that in this case, you will run the Bitcoin Core on your local machine. To run a Bitcoin core, you will need at least 145 GB of hard disk space and 2GB of RAM. According to some reports, Bitcoin’s blockchain was 200 GB in January. Also, your internet speed should be at least 50 Kbps. The upload and download limit should also be quite good. Preferably, go for a connection which doesn’t place any limits on the uploads and downloads. You can learn how to configure the Bitcoin core client from some websites or videos that you can find online. When you’re syncing Bitcoin’s blockchain for the first time, it might take a couple of days. Nevertheless, when you do it for the second time, it should be much faster.

The “node in a box” option is the third method that you can use to set up a full node. In this condition, full nodes that have already been configured are connected to the computer. These nodes come with an interface which you can use to control the device and check out the information included in it. In this case, the bulk of the work consists in storing Bitcoin’s blockchain in a portable external drive that doesn’t use a lot of energy. For instance, Bitseed, Digitalbit, and Stash are some providers that give this option.

How to Run a Full Bitcoin Node

We will show you here how to set up a Bitcoin full node using the Bitcoin Core client. For you to start, you will need to have enough space for the blockchain which requires at least 155GB and 2 GB RAM.

Since you will be uploading and downloading large quantities of information, you need a stable Internet connection.

You can take some measures to minimize the use of space and internet traffic.

To secure your full node, use a dedicated computer. This minimizes the chances of you accidentally downloading a virus that will infect your computer.

Download Bitcoin Core

From your computer, open a browser and then go to the Bitcoin Core website. Click on ‘Download Bitcoin Core.’ This automatically downloads the right version to your computer, based on the operating system that you’re using.

In case you have Windows 10, you can automatically run the installer.
The installer will start, and then you will click ‘Next.’ Then click ‘Finish,’ to complete the installation.

You are then ready to start Bitcoin Core. If you’re using Windows, then you can start it from the start menu.

Sync Blockchain Data

Once you launch Bitcoin Core, you will be asked where you want to store the data directory. This simply means where your Bitcoin wallet will be stored, including a Bitcoin blockchain copy which should be around 155GB.

Select the ‘Use the default data directory’ option. This will enable you to store your information on your hard drive. In case you don’t have enough space or you would rather store your information somewhere else, then select the ‘Use a custom data directory’ option. This allows you to choose in which specific folder to store the information, even if it’s in an external hard drive.

Then click “OK,” and the synchronization process will start. This can last for a couple of hours or even days.

Encrypt Your Wallet

Anyone who has a copy of the directory that you set up can automatically have access to your Bitcoins through the ‘wallet.dat’ file. Therefore, the best thing you can do is to encrypt this file, so that hackers cannot easily gain access to it.

Click on “Hide” then click on “Settings” menu and then “Encrypt” wallet. Go through the warning message that will pop up and then select a password.

Enter your password and then click “ok.” Make sure to write down your password, so you don’t forget it.

Backup Your Wallet

In case your ‘wallet.dat’ files get deleted or corrupted, you will not be able to access your Bitcoins.

To avoid this, go to “File,” then “Backup Wallet,” to export the wallet file. You can also back it up in a drive. Don’t upload you're backed up the wallet to cloud storage. It makes other people know that you own BTC and hackers might try to hack your password.

You can also backup your file on a USB drive. Just make sure you store your USB in a safe place.

Download Tor

To prevent other people from knowing when you’re making BTC payments, route your Bitcoin core traffic through Tor by using ‘Onion Routing.’

Do this by going to ‘Windows,’ and then download ‘Expert Bundle.’

Right-click on the file and then choose ‘Extract all.’ Click on the new directory and then click on ‘Tor.’ Double click on ‘Tor.exe.’ In case you get an alert from Windows Defender, click on ‘more info’ and then click on ‘run anyway.’

Go back to the Bitcoin core, click on ‘Settings’ and then ‘Options.’ Click on ‘Network’ then check the box ‘Use separate SOCKS5 Proxy. Click ‘OK,’ then ‘File’ then ‘Exit.’

From this point, Bitcoin will use Tor when connecting to peers.

Choose Your Peers

Bitcoin connects to IP addresses of other full nodes through its DNS feeds. The moment you launch your client, Bitcoin core will automatically connect to eight other IP addresses through its DNS seeds, to download and authenticate information.

You can choose which IP addresses your Bitcoin connects to. Start by first going to the Wiki page to get a list of reliable nodes. Then launch Bitcoin Core and go to “Settings,” then “Options” then “Open Configuration File” and click “OK” in the end.

Paste your selected nodes in a blank document using ‘connect=.’ For instance, you can paste it like this ‘connect=173.242.112.53’. Click ‘Save’ and then ‘Exit.’ Next time you launch Bitcoin Core, it will only try to connect to your selected nodes.

In case you used Tor connections in the last step, think about using the ‘Tor Nodes’ that have been listed on Wiki, for instance ‘connect=gyn2vguc35viks2b.onion’. This will keep your connections private and will make it much harder for other people to trace your connections. Just be aware that this can seriously slow down your upload/download speeds.

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Enable Pruning

When you prune, it means that you are getting rid of old information that was used during previous transactions and you’re only storing information related to new transactions. When you prune, you can cut down storage space from 155 GB to 6GB.

Don’t prune if you have the space to store the data since it enables Bitcoin Core to download the entire blockchain if you are using it for the first time. But if you don’t have space, go to file configuration as described above and then add ‘prune=550’ in a new line. This will automatically get rid of any old transactions on Bitcoin Core.

Enable Incoming Connections

You can choose to allow other networks to connect to your network nodes automatically. To do this, go to ‘Settings,’ then ‘Options,’ then ‘Network.’

In case you’re using ‘Tor’ to connect, it’s possible for ‘Bitcoin Core’ to automatically set up a hidden service that allows other peers to connect to you via the Darknet. With this, it’s much more difficult for someone to know when you are carrying out Bitcoin transactions.

Fund Your Wallet

Once you have synced and configured your Bitcoin core network, then you are ready to receive funds in your account.

Go to Bitcoin Core, ‘File,’ then ‘Receiving Address,’ and list your payment address. It’s much safer for you to use a new address anytime you are receiving a new payment. Copy the address that you have and use it to send BTC to your wallet.

Double click on the label and set a ‘Name.’ To generate a new address, click on ‘New.’

To see if your funds have been sent, click on ‘Overview.’

Is Running A Bitcoin Node For Me

In case you want to use your BTC, click on ‘Send.’ Then input the receiver’s address in the ‘Send to’ field. Alternatively, you can set a label and the amount of money you want to spend. Then go to the drop-down menu and select any denomination that you might want to spend, like mBTC (millibitcoins).

Then click on ‘Choose,’ to have the amount you want to spend validated. The more money you’re spending, the faster your transaction will be. To select this, click on the 'Confirmation Time Target' drop-down menu. You have the option of paying the minimum required amount. But in case the network is busy, then your transaction might fail to go through.

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Posted from my blog with SteemPress : http://financeandmarkets.com/how-to-run-a-bitcoin-node/

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