The Bitcoin Network
One of the core components of the Bitcoin system is the peer-to-peer network that it runs on. While peer-to-peer, or P2P, networks existed before Bitcoin, understanding what is happening on the Bitcoin P2P network is fundamental to understanding Bitcoin.
To grasp what is happening on the Bitcoin network, read this chapter that discusses what the computers, or nodes, on the Bitcoin network are doing. It covers node functions such as running a wallet, mining, maintaining a copy of the blockchain, and routing. We'll get more in-depth on wallets and mining in later sections. Here you'll want to focus on the last two functions mentioned, maintaining a record of all transactions made on the network by keeping copies of all blocks in the blockchain and validating and propagating transaction data.
Node Types and Roles
Although nodes in the bitcoin P2P network are equal, they may take on different roles depending on the functionality they are supporting. A bitcoin node is a collection of functions: routing, the blockchain database, mining, and wallet services. A full node with all four of these functions is shown in A bitcoin network node with all four functions: wallet, miner, full blockchain database, and network routing.
Figure 1. A bitcoin network node with all four functions: wallet, miner, full blockchain database, and network routing
All nodes include the routing function to participate in the network and might include other functionality. All nodes validate and propagate transactions and blocks, and discover and maintain connections to peers. In the full-node example in A bitcoin
network node with all four functions: wallet, miner, full blockchain database, and network routing, the routing function is indicated by a circle named "Network Routing Node" or with the letter "N".
Some nodes, called full nodes, also maintain a complete and up-to-date copy of the blockchain. Full nodes can autonomously and authoritatively verify any transaction without external reference. Some nodes maintain only a subset of the blockchain and verify transactions using a method called simplified payment verification, or SPV. These nodes are known as SPV nodes or lightweight nodes. In the full-node example in the figure, the full-node blockchain database function is indicated by a circle called "Full Blockchain" or the letter "B". In The extended bitcoin network showing various node types, gateways, and protocols, SPV nodes are drawn without the "B" circle, showing that they do not have a full copy of the blockchain.
Mining nodes compete to create new blocks by running specialized hardware to solve the Proof-of-Work algorithm. Some mining nodes are also full nodes, maintaining a full copy of the blockchain, while others are lightweight nodes participating in pool mining and depending on a pool server to maintain a full node. The mining function is shown in the full node as a circle called "Miner" or the letter "M".
User wallets might be part of a full node, as is usually the case with desktop bitcoin clients. Increasingly, many user wallets, especially those running on resource-constrained devices such as smartphones, are SPV nodes. The wallet function is shown in A bitcoin network node with all four functions: wallet, miner, full blockchain database, and network routing as a circle called "Wallet" or the letter "W".
In addition to the main node types on the bitcoin P2P protocol, there are servers and nodes running other protocols, such as specialized mining pool protocols and lightweight client-access protocols.
Different types of nodes on the extended bitcoin network shows the most common node types on the extended bitcoin network.