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The value of a currency is based on its stability and how it has stood the test of time, including how it has performed in various economic climates. A currency must be relatively stable and function as intended. The value of most currencies came initially from their innate properties. The issue of ascribing a currency with a specific value has always been tricky, even more so with the advent of fiat currencies because their value is not attached to a commodity.
Humans have used various commodities throughout history to conduct economic activity, ranging from agricultural products to precious metals. The use of coins as currency first started in Mesopotamia c. 625 BCE. Despite this early introduction to using coinage, our agrarian-based ancestors conducted most economic activity using the barter system. Physical goods, mainly agricultural products like cocoa and wheat, were exchanged for goods that couldn’t be made on the farm. Eventually, humans began replacing the barter system with precious metals. These metals were minted by the state (government) into a state-issued coin. Coinage was much easier to transport over great distances than other commodities.
Programmers created cryptocurrency to combat the issue of fluctuating currency values. Part of the value of a cryptocurrency comes from the idea that it has its specific purposes and functions. They all have problems they were designed to solve.
What are Nodes?
To understand the concept of nodes, we would need to go back a few years to the nineties and early 2000’s when music downloading was a thing. One of the most popular sites was Napster, which the music industry sued. It was bought out and turned into a legal music streaming service. Napster had an actual building making it easy to find and shut down. The other free music downloading sites could not be easily found because they did not have a central location. All the music files hosted on their sites were scattered worldwide, controlled by different people. Such sites like LimeWire had every song available on their network because users had access to it and constantly uploaded and updated the music files. LimeWire was not controlled by a single person or at a single location. It was accessed and controlled by different people referred to as nodes.
The Bitcoin network operates using this principle. Bitcoin nodes refer to individuals who have copies of all Bitcoin transactions and provide copies of this information to every other person present on the Bitcoin network. As Nick Sexton put it in an interview with Stevie Johnson on an episode of The Crypto Show, “every single Bitcoin node out there is talking to every other Bitcoin node.”
How do nodes work?
Each node has access to the traffic on the bitcoin network. When a node is connected, it requests an update from the rest of the nodes. The other nodes respond and bring it up to speed on everything that’s happened while the computer was offline. They operate much like a system that updates the user on all the transactions that occurred on the network while the node was unplugged. You don’t need a particular computer to function as a node. A regular computer can act as a node and join the Bitcoin network. You do not need to spend a lot of money, nor do you need any kind of special training on writing code. On this topic, Sexton said, “To be a node, you don’t need an expensive computer. You don’t need programming skills.”
Any node on the Bitcoin network can see the IP addresses of other users on the web whether they’re in Europe, China, or even next door. Bitcoin is “democratized” as Sexton puts it; anyone can function as a node. Nobody needs any special training or schooling to become a node. There are no special tests, requirements, or unique connections to operate on the network. All you need is a regular computer.
However, you cannot use a device like an iPhone because the system used to connect to the network needs to be online at all times. To be a node, you need to be constantly connected to the network without interruption. A cell phone cannot maintain a constant connection. You frequently switch data off, or turn your phone off altogether. Another reason why you can’t use a phone is because the list of Bitcoin transactions takes up a lot of space and most phones can’t handle that amount of data. The transactions could take up to over 300 gigabytes of space and you can’t fit all of that information on a phone. Even with a computer, you might need an external hard drive.
Some things that are worthy to note include:
- Every node on the network has a special key number/code that must be kept secret. If a person gets access to your code, they can access your account.
- If you want to trade your bitcoin for dollars, you need to access a Bitcoin ATM. There are many Bitcoin ATMs all over the place for people who need access to the network. You could access a site like coinatmradar.com to find a Bitcoin ATM.
- If you want to save your retirement money in Bitcoin, you can visit mydigitalmoney.com to establish an IRA.
Your Crypto IRA is a click away. Open an account today.
The Bitcoin network is a decentralized system that can’t be controlled by any one individual. It can operate this way through the use of nodes. The best thing about this decentralized system is that anybody can connect to the network without any special requirements or equipment.
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