What is Blockchain Node Hosting and How Does it Work?

What is Blockchain Node Hosting?

Before we get into some of the deeper specifics, we need to cover our basics. A blockchain is a decentralized digital ledger that records transaction data across multiple computers in a way that transactions can’t be altered retroactively. This ledger is usually fully public and is synchronized across different nodes, ensuring that all transactions are transparent and verifiable by anyone in the network.

Blockchain node hosting refers to the service of running and maintaining blockchain nodes on behalf of other individuals or companies. A “node” is simply an instance of the software necessary to participate within blockchain networks and can be hosted by an individual, a business, or specialized providers who can offer the infrastructure and technical expertise required to maintain it.

See also: What is an Enterprise Blockchain?

Blockchain Nodes and Why They Matter

A blockchain node refers to a device that connects to a blockchain network and functions alongside other nodes. This can include validating transactions, creating new blocks, and maintaining a copy of the shared ledger that records all transaction data within the blockchain.

There are several node variations in a blockchain network and can include:

• Full nodes store the entire history of blockchain transactions, validate transactions and blocks, and enforce the rules of the network.
• Lightweight (or “light” nodes) download only parts of the blockchain necessary for completing and verifying transactions, which is useful for devices with limited resources.
• Mining nodes are a type of full node that also add new blocks to the blockchain through a process known as mining, involving solving complex mathematical problems.
• Staking nodes store collateral as cryptocurrency and are usually found within Cryptocoin ecosystems that use a “proof-of-stake” method.
• Master nodes are governing nodes within a blockchain, storing a copy of the entire blockchain ledger. These master nodes also hold collateral within a crypto blockchain, helping verify transactions or performing other tasks. However, they’re unable to add new blocks,
• Authority nodes validate transactions in private or consortium blockchains. They aren’t used by all blockchain systems and are often selected based on their reputation or authority.

Separating Blockchain From Cryptocurrency

You may be familiar with some blockchain terminology within the context of cryptocurrency. While these two technologies do go hand in hand, you don’t need to deal with the complexities and risks of cryptocurrency to use blockchain nodes.

When node hosting is used outside of cryptocurrency contexts, the focus shifts from transaction validation for financial purposes to other forms of data validation and management. For example, nodes in a supply chain blockchain might focus on verifying and recording transactions related to goods moving through a logistical network rather than cryptocurrency transactions.

The fundamental difference lies in the type of data the nodes manage and the rules they adhere to–defined by the blockchain’s purpose rather than strictly financial transaction validation. Ensuring operational continuity, such as tracking supply chain data, managing healthcare records, or validating legal documents, all remain the same. However, the specifics of how these nodes contribute to the network’s consensus mechanisms and what they can process vary significantly.

Creating a Blockchain Node

Setting up a blockchain node involves several steps that include both the hardware it will run on and the software that it needs to run. A blockchain node provider generally follows these steps when creating a new one:

• Choose the right hardware. Depending on the type of node, it may need different hardware to function properly. Mining nodes verify transactions and will need a powerful SSD and networking speed, while staking nodes can be set up on much smaller, personal machines. For most applications, you’ll want:
  • A modern multi-core processor (such as an Intel Xeon equivalent).
  • At least 16GB of RAM for efficient processing.
  • An SSD with a minimum of 500 GB to handle the blockchain size and store encrypted data.
  • A stable and fast internet connection with high data caps or unlimited bandwidth to counteract network congestion and handle large data transfers.
• Determine the type of node you’re setting up. This goes right alongside the first step, as you’ll need to figure out the primary function of your node. This decision depends on whether you plan to run a full node, which stores the entire blockchain and processes all transactions, a light node that maintains only part of the blockchain, or perhaps a specialized node, like an authority node in private blockchains, which requires permissions to validate transactions. Each type of node has different demands on system resources and network bandwidth and can perform specialized tasks.
• Select and install the right software. You’ll need to download and install the blockchain-specific node software and ensure it’s compatible with your operating system, the version of the blockchain you wish to support, and the type of node it’ll function as.
• Synchronize with the blockchain. Before your node can participate in the network, it must download and verify the blockchain’s transaction history, not only the essential data. Ensure its internet connection is stable while the node downloads.
• Maintain and update regularly. Once it’s set up and is an active node, it’ll need regular updates and maintenance to keep up with network changes and security updates. This might involve updating the node’s software or hardware, monitoring performance, and ensuring it can distribute data properly.

Types of Node Hosting Services

Cloud-based Hosting

Cloud-based node hosting involves deploying your blockchain node on a virtual server provided by a cloud services platform. This type of hosting offers high flexibility and scalability, making it a popular choice for businesses and individuals who might need to adjust their resource usage based on demand.

The best cloud hosts can also act as node providers, offering dedicated nodes and supporting a high node count if needed.

Some of the advantages it offers:

• Scalability – You can easily scale up and down as needed without the need to physically upgrade hardware.
• Cost-Effectiveness – Generally, cloud-based hosting is more cost-effective, especially for smaller businesses or those with variable workloads.
• Easily Accessible – Cloud providers manage most of the infrastructure, which can reduce the complexity of setting up and maintaining dedicated nodes.
• Reliability – They offer high uptime and resilience, as cloud providers typically have multiple data centers that provide redundancy and data backups.

However, cloud-based hosting does come with some drawbacks. They offer less control over your infrastructure, as you have little control over the physical aspects of your blockchain node. Additionally, there can be security risks, too, as you’re relying on a third party for storing encrypted data.

See also: Blockchain Types and What They Are Used For?

Dedicated Server Hosting

As an alternative to the cloud, dedicated server hosting involves leasing or purchasing a physical server to run your node. This type of hosting is usually more common for larger organizations and enterprises that don’t want to share resources with other tenants.

This type of hosting comes with several advantages, like:

• Complete control – You have full control over all the nodes you operate, including the choice of hardware, configurations, and security settings.
• Better security – Because you don’t share your hardware resources with other tenants, you’re less likely to have vulnerabilities than in shared or cloud environments.
• Consistent performance – Dedicated servers provide consistent performance, as your resources aren’t shared. This is essential for applications like blockchain nodes that authenticate transactions.

Unfortunately, they also come with some downsides too. Dedicated servers are typically more expensive than cloud services due to the cost of hardware, maintenance, and physical infrastructure. This also means you need to have more in-depth technological expertise on hand or rely on a managed service provider to maintain it for you. Additonally, scaling can prove difficult as it will require physical hardware adjustments or purchasing more servers.

Use Cases for Blockchain Nodes Across Different Industries

Hosting blockchain nodes can play a key role in multiple industries and applications where the benefits of blockchain technologies—such as immutability, transparency, and decentralization—are valuable. Here are a few use cases outside of cryptocurrency:

Supply Chain Management

Blockchains can provide a transparent and immutable record of the entire supply chain. By hosting nodes, companies can track the production, shipment, and delivery of products in real-time. This helps to ensure authenticity, prevent fraud, and increase efficiency. For instance, nodes can be used to verify the origin of goods and ensure they meet certain standards, such as being organically farmed or ethically sourced.

Healthcare

In healthcare, blockchain nodes can securely store patient records and share them between authorized parties while maintaining patient privacy and data security. Hosting nodes in a healthcare blockchain allows for the immutable recording of medical records, ensuring that they’re not tampered with and are always up-to-date across all points of care.

Intellectual Property (IP) Management

Blockchain can be used for registering and verifying IP rights like patents, copyrights, and trademarks. Node hosting in this scenario allows for a decentralized and tamper-proof system where creators can register their works. This can streamline the process, reduce the potential for disputes, and provide a clear timeline of ownership.

Voting Systems

Blockchain nodes can host voting systems to ensure that votes are counted accurately and cannot be tampered with. This use of blockchain can increase trust in the electoral process, reduce the risk of fraud, and provide a transparent audit trail. Node hosting can manage the data flow and validation processes efficiently, ensuring that every vote is securely cast and counted.

Real Estate and Land Registration

Using blockchain for real estate transactions and land registrations can help reduce fraud and errors, make transactions faster and less expensive, and provide transparent tracking of land ownership history. Hosting nodes on a real estate blockchain ensures that property titles and transfers are recorded permanently and immutably.

Legal and Notary Services

Blockchain can be utilized to create immutable records of legal documents, agreements, and notarial acts. By hosting nodes, legal firms can offer services that ensure documents cannot be altered after the fact without consensus, providing a strong foundation for dispute resolution and contract management.

Identity Verification

Blockchain nodes can host systems for digital identities, allowing individuals to control and share their personal information securely. This is crucial in combating identity theft and fraud. Organizations can verify identities without needing to store sensitive information, relying on the blockchain to validate personal data.

Wrapping Up

Blockchain has a complex history and can come with negative connotations. However, the underlying technology that comes with the advantages of a decentralized network with node types to validate transactions can make a significant impact on industries that could benefit from a peer to peer network.

Businesses can run their own blockchain nodes and take advantage of these blockchain networks and smart contracts, whether they offer a dedicated host or a cloud-based solution. If you’re interested in dipping your toes into the blockchain space, there’s no safer option than hosting your blockchain servers through ServerMania.