Most Bitcoin users don’t run a node, which means they are relying on someone else’s. What this means is that someone else’s computer is trusted to propagate their outgoing transactions to miners, validate incoming transactions as legitimate, and store a copy of the blockchain. In this regard, running your own node is incredibly beneficial. You put into practice one of the most important principles of Bitcoin; one that has become a mantra in the Bitcoin community: Don’t trust; verify. Unless you run your own node, you’re relying on third parties to validate transactions, including your own. Running a node enables you – on your computer – to validate transactions on a completely equal level to everyone else on the Bitcoin network.

Transaction validation occurs in two separate instances. Validity is first checked when your node is listening for transactions relayed to its mempool that are not already in a block, and validation is done again after a block is mined to check transactions that your node’s mempool was not already not aware of. Before your node propagates transactions across the Bitcoin network, it checks that they are valid against a long set of criteria. The most important criterion for validity is that the sum of input values must be greater than the sum of outputs. In other words, your computer checks that all Bitcoin transactions are actually requesting to spend money that exists rather than counterfeiting new money. A host of other things are checked by your node when building a mempool including the transaction size, the fee, the locking and unlocking scripts, and much more. The second stage of node validation occurs after a new block has been found by a miner. Only valid blocks are propagated across the network, as each node independently ensures they are valid before forwarding them to their peers. This brings us to an important point: miners are not trusted parties. For example, nodes will reject a block if the Proof of Work is insufficient, or if the miner rewards themselves with a million new bitcoins. By running a full node, you quite literally trust no one. Instead of trusting, you verify.

In addition to benefiting you individually, running a node is a voluntary way to contribute to the entire Bitcoin project. Just by running the Bitcoin software on your computer, you are helping make Bitcoin more robust and decentralised. We said at the beginning that all Bitcoin needs to exist is two nodes – which is true. But when there are more nodes in different geographic locations, it becomes increasingly complex to coordinate a simultaneous physical attack on the Bitcoin network. It is this distribution that makes it possible for there to be rules without rulers. Decentralisation is not only the key philosophy of Bitcoin from an ideological standpoint, but necessary for its survival. Previous forms of electronic money failed because their dependence was concentrated in one physical location. Bitcoin, in contrast, has no single point of failure. Bitcoin can’t be externally stopped because there’s no headquarters to bomb, raid, or shut-down. The more people run nodes, the more this statement holds true.

Thousands of computers running the Bitcoin software produce the blockchain, which is an immutable record of every transaction in Bitcoin’s history. Bitcoin’s immutability is enforced physically since an infeasible amount of Proof of Work would be required to change transaction history. Bitcoin’s immutability is also enforced socially since everyone must agree on the same rules for transactions, not just the order of transactions. Any user who changes the rules in their favor does not derail or destroy the software for everyone else, the cheating node merely creates an invalid fork that no other nodes besides its creator recognize as legitimate. The Bitcoin blockchain is a record of historical truth that cannot be deleted. It is not stored centrally or changed easily. By running your own node, you make the Bitcoin blockchain that much more indestructible.

Thus, Bitcoin’s success has necessitated the collective impact of thousands of volunteers running nodes. This small action makes Bitcoin that much stronger and decentralised. But perhaps more importantly, it means that you are in complete control. You are verifying that everyone else is playing by the rules, that no one cheats in the monetary system you are a part of. You are doing your part creating an “electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party”. Running a Bitcoin node is the wonderful intersection of individualism and altruism. You should give it a try.

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Ironically, commercial banks actually make the best case for bitcoin. The financial system’s internal lunacy means that any remotely sane alternative is a threat. The lunacy referred to is called fractional reserve banking. As Satoshi Nakamoto highlighted, “banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve”. These credit bubbles are effectively a form of counterfeiting. When you borrow money from the bank, the money is created as digital credit then and there, out of thin air. These banks are spending from their reputation, which is only partially backed by their depositors’ funds. As a result, despite the fact that customers at banks have a legal claim to their property, all of these claims could not possibly be met at once. Indeed, we have seen instances where all customers demanded their money at once. The financial crisis in Greece is a good case in point. Upon these requests, the bank could not return the money because the customers never truly controlled it. 35% of the ATMs ran out of money, and banks were ultimately shut down for a whole week. The inherent trust is why the system collapsed.

Bitcoin is the antidote to this risk of fraud, providing a solution to the banking system. It replaces human trust with mathematical provability so that for the first time in history, humans can take complete self-custody over their digital money. Mathematical proof of ownership, in the form of digital signatures, is what allows for digital self-custody. The only other way to fully self-custody one’s money today is to hold physical cash. However, this prevents remote payments, and also compromises security – if someone broke into your house, the cash could be stolen. Bitcoin does not require you to choose between self-custody and worldwide payments – you get both. Undoubtedly, Bitcoin is a threat to the financial system, which prohibits digital self-custody whilst promoting digital counterfeiting. “You shall not counterfeit” is a Bitcoin commandment, violated by the modern financial system. The greatest offenders are commercial banks – but they are not the only ones.

Central Banks also inflate the money supply in programs commonly referred to as Quantitative Easing. Money is created out of thin air (you may have noticed this recurring theme) and artificially injected into the economy, eroding everyone’s savings. In the developed world, the ramifications of this may not be that swift at first, but a look at Argentina exemplifies this point. The central bank has drastically inflated the money supply, leading to a 98.8% year-on-year inflation rate. This shows how quickly the value of your savings can be drained. Even in the United States, the dollar has lost more than 80% of its purchasing power against gold since 1970. The infinite supply of fiat money makes it difficult, and sometimes impossible, to save for the future. Conversely, Bitcoin has a perfectly scarce supply of 21 million that cannot be inflated, only distributed. Counterfeiting is impossible in the Bitcoin system, as everything is publicly auditable. A record of all transactions ever made is publicly available, making it impossible to create fake money.  As such, it is a savings technology engineered to hold its purchasing power. Bitcoin removes the need to trust the central bank not to debase the currency — a trust which has been breached throughout history. We can send digitally and save permissionlessly with bitcoin. Bitcoin threatens the central bank’s monopoly over the money they control. No one controls Bitcoin, and it cannot be inflated.

Now to our second commandment: “You shall not confiscate”. Bitcoin is money that cannot be taken away from you without your consent. Money protected by mathematics provides incorruptible security compared to the current financial system which is protected by flesh and blood. “Owning” your money in the bank means that you are trusting the bank to return your money upon request. However, owning bitcoin fulfills the true meaning of the word. It requires possession over your private keys – 12 or 24 words that you alone know. Owning your keys is the only way to take possession over bitcoin. Anyone could try and guess the keys, but they’d have to guess one hundred and fifteen quattuorvigintillion (2²⁵⁶) times.

Confiscation and censorship of money within the traditional financial system is something we have seen. Alexei Navalny, a political opponent of Vladimir Putin, had his bank accounts frozen in late 2020. In response, his ally, Leonid Volkov, urged supporters to use bitcoin to receive donations. Money that cannot be confiscated is disrupting a system where confiscation is possible, and sometimes rampant. But, in Jacob Applebaum’s words: “with cryptography(,) no amount of violence will ever solve a math problem.”

Bitcoin is an emerging branch of freedom, growing on the plant that is the Internet. This branch, though still young, poses a significant threat to the financial system. And indeed, as Washington said about Liberty, it is rapidly growing. Beyond the more philosophical benefits that Bitcoin poses, there are practical ones, too. Bitcoin’s decentralisation renders it borderless. To send a million dollars from the US to Japan would take days and would be expensive. You can send $1 million of bitcoin to Japan for a couple of cents and it would be confirmed in 10 minutes. With the increased globalisation of the economy, Bitcoin is simply an easier digital payments system. But it is two profound, ethical bedrocks of Bitcoin that threaten the financial system: the inability to counterfeit and confiscate and; more simply: the inability to steal. Bitcoin has taken root. It is Liberty – the plant that “when it begins to take root, is a plant of rapid growth”. We shall see how this plant blossoms, as it begins to revolutionise humanity’s ancient technology: money.

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