Blockchain Nodes Explained

A node is a device on a blockchain network, that is in the crux the underpinning of the technology, allowing it to function and survive. Nodes are disseminated across a widespread network and carry out a variety of tasks. In this blog we will try to understand what blockchain nodes are.

A node can be any active electronic device, including a computer, phone or even a printer, as long as it is connected to the internet and as such has an IP address. The role of a node is to support the network by maintaining a copy of a blockchain and, in some cases, to process transactions. Nodes are often arranged in the structure of trees, known as binary trees. Each cryptocurrency has its own nodes, maintaining the transaction records of that particular token.

Nodes are the individual parts of the larger data structure that is a blockchain. As the owners of nodes willingly contribute their computing resources to store and validate transact ions, they have the chance to collect the transaction fees and earn a reward in the underlying cryptocurrency for doing so. This is known as mining or forging.

Processing these transactions can require large amounts of computing and processing power, meaning that the average computer’s capabilities are inadequate. Generally, professional miners tend to invest in extremely powerful computing devices known as CPUs (central processing units) or GPUs (graphics processing units) in order to keep up with the demand for processing power that is required for them to validate transactions and as such earn the rewards that comes with doing so.

A node can either be a communiqué endpoint or a point of communiqué redistribution, connecting to other nodes. Every node on the network is considered equal, however certain nodes have different roles in the manner in which they support the network. For example, not all nodes will store a full copy of a blockchain or validate transactions.

A full node downloads a complete copy of a blockchain and checks any new transactions coming in based on the consensus protocol utilized by that particular cryptocurrency or utility token. All nodes use the same consensus protocol to remain compatible with each other. It is the nodes on the network that confirm and validate transactions, putting them into blocks. Nodes always come to their own conclusion on whether a transaction is valid and should be added to a block with other transactions, irrespective of how other nodes act.

Cryptocurrency Mining Explained

Cryptocurrency mining is one of the most regularly used approaches of validating transactions that have been executed over a blockchain network. Not only does blockchain work to protect transaction data through encryption, as well as store this data in a decentralized manner (i.e., on hard drives and servers all over the world) so as to keep a single entity from gaining control of a network, but also the primary goal is to ensure that the same crypto token isn’t spent twice. In effect, “mining” is one means of making sure that cryptocurrency transactions are accurate and true, such that they can never be compromised in the future.

Cryptocurrency mining itself refers to a type of validation model known as “proof-of-work” (PoW). There are two common validation types, and we’ll look at the other, known as proof-of-stake, in a moment.

In the PoW model — which bitcoin, Ethereum, Bitcoin Cash, and Litecoin use, to name a few — individuals, groups, or businesses compete with one another with high-powered computers to be the first to solve complex mathematical equations that are essentially part of the encryption mechanism. These equations correspond to a group of transactions, which is known as a block. The first individual, group, or business that solves these transactions, and in the process validates the accuracy of these transactions within a block, receives a “block reward.” A block reward is paid out as digital tokens of the currency that’s being validated.

As an example, the current block reward for bitcoin is 12.5 tokens. That means whoever is the first to correctly solve equations for a block is paid 12.5 tokens. With bitcoin near $9,500 per coin, that works out to a nearly $119,000 haul.

There are two major concerns attached to the PoW model. First, it’s an extremely electricity-intensive practice. To mine virtual currencies, massive mining centres with graphics processing units and/or ASIC (application-specific integrated circuit) chips are set up to handle this validation and processing. The electricity costs, depending on where an operation is located, can be enormous. It could also, in theory, be a drain on local or national electric grids, depending on how large digital networks and mining farms become.

The other issue is that the PoW model has a security vulnerability, at least for smaller digital currencies. Any individual or group that can gain control of 51% of a network computing power could essentially hold that network and digital currency hostage. Networks the size of bitcoin, Ethereum, and Litecoin have next to nothing to worry about. However, newly issued coins with fewer participants could be susceptible.

Though cryptocurrency mining might often be lumped in as one big free-for-all, there are differences in the equipment being used to validate transactions. For bitcoin, miners need to use highly specialized and expensive ASIC chips because of the difficulty in validating bitcoin transactions. Meanwhile, most other virtual currencies allow miners to use some variation of graphics processing units from the likes of NVIDIA or Advanced Micro Devices to proof transactions. However, the difficulty in this mining can still vary from one cryptocurrency to the next.

What is Cryptojacking?

Cryptojacking (also called malicious cryptomining) is an emerging online threat that hides on a computer or mobile device and uses the machine’s resources to “mine” forms of online money known as cryptocurrencies. It’s a burgeoning menace that can take over web browsers, as well as compromise all kinds of devices, from desktops and laptops, to smart phones and even network servers.

Like most other malicious attacks on the computing public, the motive is profit, but unlike many threats, it’s designed to stay completely hidden from the user.

Cryptojacking is a scheme to use people’s devices (computers, smartphones, tablets, or even servers), without their consent or knowledge, to secretly mine cryptocurrency on the victim’s dime. Instead of building a dedicated cryptomining computer, hackers use cryptojacking to steal computing resources from their victims’ devices. When you add all these resources up, hackers are able to compete against sophisticated cryptomining operations without the costly overhead.

If you’re a victim of cryptojacking, you may not notice. Most cryptojacking software is designed to stay hidden from the user, but that doesn’t mean it’s not taking its toll. This theft of your computing resources slows down other processes, increases your electricity bills, and shortens the life of your device. Depending on how subtle the attack is, you may notice certain red flags. If your PC or Mac slows down or uses its cooling fan more than normal, you may have reason to suspect cryptojacking.

The motivation behind cryptojacking is simple: money. Mining cryptocurrencies can be very lucrative, but turning a profit is now next to impossible without the means to cover large costs. To someone with limited resources and questionable morals, cryptojacking is an effective, inexpensive way to mine valuable coins.

How does cryptojacking work?

Cryptojackers have more than one way to enslave your computer. One method works like classic malware. You click on a malicious link in an email and it loads cryptomining code directly onto your computer. Once your computer is infected, the cryptojacker starts working around the clock to mine cryptocurrency while staying hidden in the background. Because it resides on your PC, it’s local—a persistent threat that has infected the computer itself.

An alternative cryptojacking approach is sometimes called drive-by cryptomining. Similar to malicious advertising exploits, the scheme involves embedding a piece of JavaScript code into a Web page. After that, it performs cryptocurrency mining on user machines that visit the page.

In early instances of drive-by cryptomining, web publishers caught up in the bitcoin craze sought to supplement their revenue and monetize their traffic by openly asking visitors’ permission to mine for cryptocurrencies while on their site. They posed it as a fair exchange: you get free content while they use your computer for mining. If you’re on, say, a gaming site, then you probably will stay on the page for some time while the JavaScript code mines for coin. Then when you quit the site, the cryptomining shuts down too and releases your computer. In theory, this isn’t so bad so long as the site is transparent and honest about what they’re doing, but it’s hard to be sure the sites are playing fair.

More malicious versions of drive-by cryptomining don’t bother asking for permission and keep running long after you leave the initial site. This is a common technique for owners of dubious sites, or hackers that have compromised legitimate sites. Users have no idea that a site they visited has been using their computer to mine cryptocurrency. The code uses just enough system resources to remain unnoticed. Although the user thinks the visible browser windows are closed, a hidden one stays open. Usually it’s a pop-under which is sized to fit under the task bar or behind the clock.

Stay tuned to learn how to stay safe form cryptojacking and how to prevent it altogether.