NODES IN BLOCKCHAIN &

RISKS RELATED TO IT

PRESENTED BY:
PRASATH (25MSG1R50)
SABA FATHIMA (25MSG1R56)
V. PAVANI (25MSG1R68)
J. MANIVARMA (25MSG1R72)
KAVIARASAN (25MSG1R73)
WHAT IS BLOCKCHAIN?
Blockchain is a decentralized, distributed digital ledger system that records
transactions across multiple computers in such a way that the recorded entries cannot
be altered retroactively.
It ensures transparency, security, immutability and trust without relying on a
central authority.
Simple Definition:
A blockchain is like a digital notebook shared across thousands of computers where
every page (block) is permanently linked to the previous page using cryptographic
codes (hashes).
Technical Definition:
Blockchain is a distributed ledger technology (DLT) that stores data in the form of
interconnected blocks secured through cryptographic hashing and validated by a
network of nodes through a consensus mechanism.
 CHARACYERISTICS OF BLOCKCHAIN

1. Decentralization
No central authority, all participants maintain copies of the ledger.
2. Immutability
Once data is added, it cannot be altered or deleted.
3. Transparency
Every transaction is visible to authorized participants.
4. Security
Data is secured through cryptography, hashing, digital signatures, and
distributed consensus.
5. Consensus Mechanisms
Nodes use algorithms like PoW, PoS to agree on transaction validity.
6. Anonymity / Pseudonymity
Users are identified by addresses, not personal names.
7. Distributed Ledger
Data is stored across network participants, eliminating single point of failure.
 COMPONENTS OF BLOCKCHAIN

1. Block – Contains header + transaction data.

2. Hash Function – Cryptographic algorithm (like SHA-
256).
3. Timestamp – Time recorded for validation.
4. Merkle Tree – Data structure for fast verification.
5. Nodes – Individual computers maintaining the blockchain.
6. Smart Contracts – Self-executing contracts written in
code.
7. Wallets & Keys – Public and private keys for
authentication.
 TYPES OF BLOCKCHAIN AND ITS APPLICATIONS

1. Cryptocurrency – Blockchain is used to run digital currencies

1. Public Blockchain – A fully open like Bitcoin and Ethereum.
blockchain where anyone can join, read
2. Banking & Finance – It enables faster, secure payments and
and validate transactions. reduces fraud in financial services.
2. Private Blockchain – A restricted 3. Supply Chain – It tracks products end-to-end to ensure
blockchain controlled by one organization authenticity and transparency.
with limited access. 4. Healthcare – It securely stores patient records and prevents
fake medicines.
3. Consortium Blockchain – A
blockchain managed by a group of 5. Government – It is used for land records, identity systems,
and secure voting.
organizations with shared control and
permissions. 6. Smart Contracts – It automates agreements that execute
themselves when conditions are met.
4. Hybrid Blockchain – A blockchain that 7. Real Estate – It helps in transparent property transfers and
mixes public and private features to offer fraud-free land registration.
both transparency and privacy. 8. Education – It issues and verifies certificates to prevent
document fraud
 NODES IN BLOCKCHAIN
Meaning of Nodes
Nodes are computers or devices connected to the
blockchain network that store, maintain, validate or
share copies of the blockchain ledger.
They are the backbone of blockchain technology.
Key Role of Nodes
• Validate transactions
• Ensure network security
• Store complete/partial ledger
• Participate in consensus
TYPES OF NODES
1. Full Nodes
• Store a complete copy of the blockchain
• Validate every block and transaction
• Ensure network rules are followed
• Examples: Bitcoin Core nodes
2. Light Nodes (Simplified Payment Verification – SPV
Nodes)
• Store only block headers, not the full blockchain
• Faster and requires less storage
• Mainly used in mobile wallets
3. Mining Nodes / Validator Nodes
• Participate in consensus
• Solve cryptographic puzzles (PoW)
• Create new blocks and receive rewards
4. Master Nodes
• Perform governance and voting
• Do not mine but validate and record
transactions
• Used in Dash, PIVX etc.
5. Authority Nodes
• Used in private blockchains
• Only selected users can validate transactions
• Used in enterprise systems (banks, corporates)
6. Archival Nodes
• Store entire historical data
• Used for research, audit, and analytics
 FUNCTIONS OF NODES

i. Validation – Check whether transactions

are valid.
ii. Propagation – Relay information to other
nodes.
iii. Storage – Keep a copy (full or partial) of
the blockchain.
iv. Security – Ensure network integrity.
v. Consensus Participation – Follow
protocol rules for verifying blocks.
 BENEFITS OF NODES
• Higher decentralization
• Higher security
• Faster propagation
• Less chance of 51% attack
• Increases trust and transparency
• Bitcoin has thousands of nodes,
making it extremely difficult to hack.
RISKS RELATED TO NODES IN BLOCKCHAIN

1. Security Risks
a. 51% Attack
• If a single group gains more than 50% of network mining power, they can
manipulate transactions.
b. Double Spending
• Same digital currency is spent twice by manipulating confirmation time.
c. Sybil Attacks
• A user creates multiple fake identities to manipulate the network.
d. Smart Contract Bugs
• Errors in code can cause theft of funds (e.g., DAO Hack in Ethereum).
2. Operational Risks 3. Legal and Regulatory Risks
a. Scalability Issues a. Lack of Regulations
• Blockchain networks (like Bitcoin) process • Governments still developing laws for crypto,
fewer transactions per second compared to tokens, NFTs.
traditional systems. Uncertainty affects investors and businesses.
b. High Energy Consumption b. Cross-Border Jurisdiction Issues
• Proof-of-Work requires massive computing • Blockchain operates globally; legal conflicts
power (mining). arise between countries.
c. Network Latency
• Transactions may take time to be confirmed
(e.g., Bitcoin ~10 minutes).
4. Financial Risks
6. Integration and Technological Risks
a. Price Volatility
a. Interoperability issues
• Cryptocurrencies fluctuate heavily in value.
• Different blockchains cannot easily
b. Fraud and Scams communicate (Bitcoin vs Ethereum).
• Ponzi schemes, fake ICOs, rug pulls. b. Complexity in Implementation
5. Privacy Risks • Requires technical expertise, new
a. Public Visibility infrastructure, and skilled developers.
• Transactions are transparent; attackers can track c. Bugs and Software Vulnerabilities
patterns. • Coding errors can lead to network failure
b. Key Management Issues or fund loss.
• If private key is lost → access to funds is
permanently lost.
If key is stolen → attacker gets full control.
 REAL WORLD EXAMPLE-- BITCOIN

• Bitcoin is the first and most popular cryptocurrency that uses blockchain technology to record and verify
transactions. It is completely decentralized, meaning no government or bank controls it.
• Bitcoin perfectly demonstrates how nodes, mining and block creation work in a real blockchain network.
Types of Bitcoin nodes (short)
• Full node — stores and verifies the entire blockchain and enforces consensus rules (example:
Bitcoin Core).
• Pruned full node — validates blocks but discards old block data to save disk space.
• SPV / Light node — stores only block headers and relies on full nodes for proof (used in mobile
wallets).
• Mining node — a miner’s node that assembles transactions into candidate blocks and participates
in Proof-of-Work.
• Relay / Gateway node — high-bandwidth nodes that speed propagation across the network.
• Archive node — full node that keeps historical state for explorers and analytics.
 CORE ROLES OF BITCOIN NODES
1. Transaction Reception & Propagation – Nodes receive new transactions and quickly share them across
the network.
2. Transaction Validation – Nodes check transactions for correct signatures, inputs and double-spend rules.
3. Mem pool Management – Nodes store valid transactions in a waiting pool until miners pick them for a
block.
4. Block Relay & Validation – Nodes verify new blocks and relay only valid ones to the network.
5. Enforcing Consensus Rules – Nodes enforce Bitcoin’s protocol rules and reject any invalid data.
6. Chain Selection / Fork Resolution – Nodes pick the chain with the most Proof-of-Work and resolve
forks automatically.
7. Providing Data to Wallets & Services – Nodes supply wallets and apps with verified transaction and
block information.
8. Network Health & Censorship Resistance – Large numbers of nodes prevent censorship and keep the
network decentralized and secure.
Step-by-step example (Alice → Bob) showing node actions
• Alice creates & signs a transaction in her wallet and broadcasts it.
• Nearby nodes receive the transaction, check signatures and inputs, and if valid,
add it to their mem pools.
• Nodes relay the transaction across the P2P network until miners see it.
• A miner’s node picks transactions from its mem pool, builds a candidate block
(including Alice→Bob)and starts PoW.
• Miner finds a valid nonce and broadcasts the new block to its peer nodes.
• Receiving full nodes validate the block and finding it valid, add it to their chain
and relay it onward.
• Other miners switch to building on top of that block, after multiple confirmations
(new blocks), Alice→Bob is considered final.
Security benefits nodes provide
• Prevent double-spending by independently verifying transactions.
• Reject malformed blocks/attacks, e.g., blocks that do not meet difficulty or contain
invalid transactions.
• Increase cost of attacks: to change history, an attacker must outwork the combined
hashing power and convince many nodes to accept an invalid chain.
CONCLUSION

Blockchain technology provides a secure, transparent and decentralized system

for recording and verifying digital transactions and nodes play the most
critical role in maintaining this trustless environment. By validating
transactions, enforcing consensus rules, managing mem pools and relaying
blocks, nodes ensure that no single authority controls the system and that every
transaction remains accurate and tamper-proof. Bitcoin is the best example of
how blockchain and nodes work together, using thousands of independent
nodes worldwide to secure the network, prevent fraud, and maintain the
integrity of the ledger. Overall, nodes are the backbone of blockchain, making
the entire system reliable, decentralized, and resistant to attacks or
manipulation.
REFRENCE

•Daniel Drescher (2017)-Blockchain Basics – Non-technical

introduction to blockchain & decentralization.
•Roger Wattenhofer (2016) -The Science of the Blockchain –
Technical structure of nodes, consensus & networking
•[Link] – Technical documentation for Bitcoin nodes.
•Chatgpt
THANK YOU