What is a network?

The network is made up of every computer which interacts with the blockchain. These computers are called nodes*. The conversation about nodes can get quite involved, so for now we’re going to stick to the basics and concentrate on what we’ll call full nodes. A full node is a computer which downloads the whole blockchain and checks whether new transactions are legal and valid. These nodes also check one another to make sure every node is using the same rules and blockchain and if any node is found not to be, its conclusions are ignored by the network. If consensus cannot be reached by the nodes about the validity of a transaction, then the transaction is rejected. As we said, there are other types of nodes and these may differ from cryptocurrency to cryptocurrency.

Together, a coin, a blockchain to store the history of transactions and a network to verify them constitute a cryptocurrency. The way in which networks confirm and secure the transactions of the cryptocurrency is defined by their consensus protocol. In this FAQ we will stick to the two most common: Proof of Work and Proof of Stake.

*What does and doesn’t constitute a node will differ from cryptocurrency to cryptocurrency. Here, we’re saying any computers which interact with a blockchain can be considered a node. However, in the Bitcoin whitepaper “node” refers only to computers that are engaged in mining. It’s good to be aware that there are different uses of the term. We’ll stick to the most general definition.