Scrutinise your Bitcoin transactions

in LeoFinance8 months ago

Scrutinize your Bitcoin transactions

Table of Contents

What are we scrutinizing?
Node considerations
Node options
Trade-offs
What are we scrutinizing?

As outlined in the secure page, if you aren’t trusting your own node to verify your transactions then you are trusting someone else’s. A node is a computer running the ‘bitcoin software’ that comes with its own copy of the ‘bitcoin rules.’ Each time a node sees a transaction it will scrutinize the details against its own ruleset to ensure everything is present and correct and that the creator of the transaction isn’t trying to cheat the system. By having your wallet connected to your own node, you can be sure that every transaction you receive is compliant with the rules that you and everyone else participating in the network agree upon.

If you are trusting someone else’s node, you are abiding by their rules. Their rules could be allowing false transactions to hit your wallet leading you to believe you are receiving bitcoin when in reality you aren’t. Try spending that bitcoin with someone who is abiding by the ‘real’ or widely adopted rules and you will be rejected.

From a privacy perspective, trusting someone else’s node means that they can see…

Every transaction you send
Every transaction you receive
All of your balances
In some cases every address in your wallet (even the currently empty ones)
In a perfect world, everyone would have their own node set up before they even get any bitcoin. That way they never have to leak any transactional privacy by relying on other people’s nodes to verify their transactions for them. The problem is, it takes seconds to download a phone wallet and receive bitcoin and it takes 3-5 days to set up a node and downloads the blockchain so the natural progression works in the reverse.

If, like most, you already have a wallet with bitcoin that is backed by someone else’s node, fear not. All you need to do is set up a new wallet (they’re free remember) that is backed by your own node and send your funds across. For an extra level of security, I would recommend conjoining them before sending but this is not absolutely essential.

Here is a podcast episode where I talk through the basics of nodes.

Node considerations
The main things to consider when choosing a node to run…

Your technical ability
Your budget
What features do you require
Running costs
Bandwidth
The level of support/community available
Wallet compatibility
Node options
Difficulty Description Setup Guide Works with Samourai, Blue, or Sparrow?
Super Easy Bitcoin Core on a computer Bitcoin Core No - Built-in wallet or works with Specter desktop
Plug + Play myNode One myNode All
Plug + Play Nodl One or Nodl Dojo Nodl All
Self build RoninDojo RoninDojo All
Trade-offs
Depending on the setup you go for, every node comes with its own tradeoffs. If you want a plug-and-play option with sturdy hardware that requires little maintenance, it’s going to cost you much more than a DIY option built to a budget spec. Another example would be that Bitcoin Core offers the easiest setup but lacks the ability to allow mobile wallets to connect to it. Not good if you want to spend bitcoin when away from your laptop!

Consider carefully what is important to you before making your decision and don’t be afraid to reach out for support. All of the projects mentioned above have very supportive community chat groups that can offer you advice.

Running a node is a big step for many but is an absolute must for the ultimate transaction-level privacy.

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