Networks and Nodes

Networks and Nodes




The blockchain is maintained by a peer-to-peer network. The network is a collection of nodes that are connected to one another. Nodes are individual computers that take in input and performs a function on them and gives an output. The blockchain uses a network called “peer-to-peer network” which partitions its entire workload between participants, who are all equally privileged, called “peers”. There is no longer one central server, now there are several distributed and decentralized peers.



Why do people use the peer-to-peer network?

One of the main uses of the peer-to-peer network is file sharing, also called torrenting. If you are to use a client-server model for downloading, then it is usually slow and entirely dependent on the health of the server.

However, in a peer-to-peer system, there is no central authority, and hence if even one of the peers in the network goes out of the race, you still have more peers to download from. Plus, it is not subject to the idealistic standards of a central system, hence it is not prone to censorship.

If we compare the two:

The decentralized nature of a peer-to-peer system becomes critical as we move on to the next section. The idea of combining this peer-to-peer network with a payment system has completely revolutionized the finance industry by giving birth to cryptocurrency.

The use of networks and nodes in cryptocurrencies.

The peer-to-peer network structure in cryptocurrencies is structured according to the consensus mechanism that they are utilizing. For cryptos like Bitcoin and Ethereum which uses a normal proof-of-work consensus mechanism (Ethereum however will eventually move on to Proof of Stake), all the nodes have the same privilege. The idea is to create an egalitarian network. The nodes are not given any special privileges, however, their functions and degree of participation may differ. There is no centralized server/entity, nor is there any hierarchy.

These decentralized cryptocurrencies are structured like that is because of a simple reason, to stay true to their philosophy. The idea is to have a currency system, where everyone is treated as an equal and there is no governing body, which can determine the value of the currency based on a whim. This is true for both bitcoin and Ethereum.

Now, if there is no central system, how would everyone in the system get to know that a certain transaction has happened? The network follows the gossip protocol. Think of how gossip spreads. Suppose Alice sent 3 ETH to Bob. The nodes nearest to her will get to know of this, and then they will tell the nodes closest to them, and then they will tell their neighbors, and this will keep on spreading out until everyone knows.

A node is simply a computer that participates in the Ethereum network. This participation can be in three ways

  • By keeping a shallow-copy of the blockchain a Light Client
  • By keeping a full copy of the blockchain a Full Node
  • By verifying the transactions by Mining

However, the problem with this design is that it is not really that scalable. This is why a lot of new generation cryptocurrencies adopt a leader-based consensus mechanism. In EOS, Neo, and similar the nodes elect leader nodes or “supernodes” who are in charge of the consensus and overall network health. These cryptos are a lot faster but they are not the most decentralized of systems.

Forced to make the trade-off between speed and decentralization.

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