What is a Blockchain Server? Requirements, Cost & Benefits

When considering adopting blockchain technologies to solve technical problems, the need to host blockchain servers or blockchain node becomes a requirement. Unlike traditional centralized servers, hosting a server will require distributing nodes across different running servers on edge (in multiple locations) and performing different tasks.

This article elaborates on a blockchain server, explains the requirements for setting one up, and shows the benefits and costs associated with hosting one.

#What is blockchain?

A popular definition of blockchain is a distributed ledger system that maintains an open record of transactions across different servers or nodes. To achieve consensus across the system, the program keeps a synchronized record of verified transactions so that any manipulation attempt on these records would require modifying all copies of the record on other nodes. And is considered impossible.

It consists of a series of blocks, each a collection of transactions connected by a cryptographic hash, which guarantees the data's immutability.

Source: Shutterstock.com

#What is a blockchain server?

A blockchain server, or a node, is a core component of a blockchain. It is an Infrastructure that hosts copies of the network’s program, validates transactions, and participates in the network’s consensus mechanism.

Source: Shutterstock

While traditional servers are hosted and operated within a centralized system, anyone can host nodes and begin to participate in network activities, meaning they are decentralized in managing data across multiple nodes on the network.

Their ability to maintain storage decentralized increases resilience against attacks. By sharing all activities on-chain, the nodes spread transactions and keep all versions of the blockchain consistent.

#Types of blockchain servers

#1. Full node

A full node is a server that records every block and transaction in the network's history. Most times, the primary reason for hosting a full node would be to maintain the network's integrity by checking each transaction against the consensus rules of the network.

Aside from profitable reasons, you might also consider hosting a full node if you are planning on adopting a blockchain network to solve new technical or non-technical problems. This scale of adoption is usually done by companies.

#2. Light node

Light nodes are also called lightweight servers or simplified payment verification (SPV) nodes. They do not store copies transactions but Instead, they download only the block headers and rely on running full nodes to provide transaction verification.Hosting a light node is usually intended to be more resource-efficient than hosting full nodes since they require less computing power and storage capacity.

They are commonly employed in mobile wallets and other applications where resources are limited.

Source: walletstreetmojo

#3. Miner nodes

These types of servers participate in the mining process of the blockchain, by solving complex cryptographic hashing to create new blocks and add them to the blockchain. While everyone tries to solve the hash, the first miner to resolve the puzzle will be rewarded with a newly minted token and transaction fees. The transaction is then added to the following block and is rewarded.

They are usually hosted by miners mostly on a minimal scale for personal or profitable reasons. Although they do require a lot of energy, it is a resource-intensive process.

Also read: How to run a solana node

#Blockchain servers vs. traditional servers

#1. Decentralization vs. centralization

• Blockchain servers operate as decentralized servers, and anyone can simply host a server and immediately begin to participate in blockchain activities. Its ability to remain decentralized is key.
• Traditional servers operate as centralized servers. Where data management and decision-making on how the hosted programs will fare on their server is made by an organization, a group of people, or a person. It is known to be prone to vulnerabilities.

#2. Security and integrity of data

• Blockchain servers: They use cryptographic hashes and consensus techniques to ensure the data stays synchronized, making it difficult for bad actors to change. Some different servers from random places owned by different people have to confirm each transaction before they can be accepted.

• Traditional Servers: They rely on centralized control and security protocols to protect their data, leaving them vulnerable to data breaches and hackers.

#3. Requirements for resources

• Blockchain servers: In terms of resource intensity, full nodes and miners require a substantial amount of storage and processing power. While validators and light nodes require the need of a much lesser amount of power and still improve network performance and security.

• Traditional servers: There are a lot of resources needed depending on the application and system size. For example, a regular centralized server would require a lot of equipment and engineering upkeep, but it can also be scaled to match demands.

#4. Transparency and trust

• Blockchain servers: They provide transparency by making transactions visible and verifiable to all parties. The fact that anyone can simply host a server and participate in the network makes it easy to trust and promotes confidence among all its participants since the ledger is verifiable to the public.

• Traditional servers: When this server is put up, an organization or centralized personnel usually in charge of the server is expected to make the right decisions about maintenance. Since transparency depends on the entity's preferences, there may be questions about data tampering and accountability in certain situations.

Also read: How to run an ethereum node

#Blockchain server requirements

The following are the general requirements for running a blockchain server.Hardware requirements

1. CPU: A multi-core processor with four or more cores and a contemporary core such as an AMD Ryzen 7 or Intel i7 or i9.
2. RAM: You will need a minimum of 16 GB RAM or 32 GB RAM for better performance.
3. Storage: You can add SSD (Solid State Drive) to improve your read and write speeds. The size of the blockchain you're running on your server will determine the storage capacity you will need; for example, Bitcoin will require hundreds of GBs, while Ethereum will require more than 1 TB.
4. Network: To handle massive volumes of data, use a high data cap or unlimited bandwidth. You can also use a high-speed broadband connection.

#Software requirements

1. Operating system: For increased stability and security, you can use a Linux distribution like Ubuntu, CentOS, and Debian. It's usually generally and widely preferred. Although you can still use Windows and macOS, they are less popular in commercial settings.
2. Network software: You will need to install the official node software for the blockchain, for example, Geth for Ethereum or Bitcoin Core. It usually depends on the blockchain you will be running,
3. Monitoring tools: You must set up a monitoring tool on your server. Prometheus and Grafana are examples of tools you can use to log and monitor your node.

#Security components

1. Firewall: To ensure security on your server you can set up a firewall rule to only let in certain ports that are required, this will help you prevent unwanted access.
2. Encryption: You can secure your valuable details, like your private keys, for signing transactions using hashing packages.
3. Backup: You will need to set up tools like Veeam for regular backups of the configuration files and blockchain data if you're running a full node. Make sure the backup programs you're using are set up automatically.
4. Access control: You must restrict unauthorized personnel's access to the server by applying role-based access control (RBAC).
5. Auditing and logging (optional): You can also keep track of all your activities by conducting routine audits to look for unusual activity.
6. Physical security(optional): You must ensure your server is in a safe area with limited access. Servers are usually kept in separate rooms, and away from human active environments where only authorized individuals can have access to it.

For example, if you would want to host an Ethereum server, below is a list of the requirements you will need to set one up:

• Hardware: You will need an 8-core CPU, 32 GB of RAM, 2 TB NVMe SSD for storage, and a 1 Gbps network.
• Operating system: You will use Ubuntu 20.04 LTS, with a Geth node package: Geth. You can install the dependencies using the package manager sudo apt-get install -y build-essential.
• Security: The use of iptables or UFW will enable running only the required ports (Ethereum, 30303). SSL/TLS will be used for RPC endpoint encryption, and SSH keys will be used for server access authentication. Other regular updates are done running the command apt-get update && apt-get upgrade.

Also read: How to run a polygon node

#Blockchain server cost

Depending on the kind of blockchain you are hosting, the server you'll be hosting blockchains will have different running costs. Running a public blockchain, for instance, will differ from running a private blockchain and mining node.

The following list is a general breakdown of costs to set up a blockchain server:

#1. Breakdown of hardware expenses:

• CPU: $300 - $1000
• RAM: between $100 and $300, $150 - $500 for storage
• Hardware in total would cost $820 - $3800

#2. Software and licensing Fees:

• Operating system: $100 to $200 (Windows) or free (Linux)
• Node software: Open-source software is also available for free (let's employ encryption) or $50– $200/year for SSL/TLS certificates.
• Software in total would cost $50–$1400.

If you would prefer to continue your set-up, the list below highlights the average cost for continuation.

#3. Nodes for public blockchain (like Ethereum, Bitcoin):

• Starting price: $870 to $5200
• Costs of operations per year: $1065 to $16,000
• Use cases: mining, smart contracts, and decentralized transactions

#4. Nodes for private blockchain:

• Start-up expenses are similar to running a public node and will cost about $36,000 to $133,000.
• Costs of operations per year are reduced to about $16,000 to $48,000 per node per year as a result of the network's size control.
• Mining servers: can start from $1320 to $7200 (more if a GPU is used).
• Use cases: For Mining cryptocurrencies.

Optimize your blockchain setup with Cherry Servers. Our powerful servers are designed for cost-effective performance, whether you're mining, running smart contracts, or handling enterprise solutions.

#Blockchain server benefits

#1. Improved security protocols and data accuracy

• Immutable ledger: Prevents manipulation of data.
• Data protection and integrity are ensured via cryptographic security.
• Consensus mechanisms: Provides safe transaction validation.

#2. Increased transparency and trust in operations

• Public ledger: Transaction history is accessible to everybody.
• Verifiable transactions: Prevents fraud and guarantees accountability.
• Auditing processes are made simpler by auditable records.

#3. Benefits of decentralization

• No single point of failure: This improves the resilience of the network.
• Distributed control: Decreases the possibility of centralized attack or corruption through distributed control.
• Improved cooperation: It makes peer-to-peer communication easier.

#4. Reliability and high availability

• Reoccurring nodes: They guarantee uptime and uninterrupted operation.
• Fault Tolerance: It aids in keeping performance intact even when a node fails.
• Global accessibility: It offers reliable access worldwide.

#5. Potential for scalability and challenges

• Growth capabilities: Able to accommodate growing numbers of users and volume of transactions.
• Scalability solutions: To improve performance, use sharding and Layer 2 solutions.
• Challenges: Managing growing resource needs and network complexity provide challenges.

#Challenges of running a blockchain server

#1. Scalability and network congestion problems

• Transaction volume: When there is a volume of transactions being executed, the effect could slow down your server’s processing times
• Block size limits: Some blockchains like Ethereum have a regulator amount of transactions per block; this could cause congestion, which will, in turn, make your server slow.
• Increased transaction fees and delays may also result from network congestion.

#2. Risks of security

• DDoS attacks: The application of firewalls, dispersed network designs, and rate limitation.
• Software vulnerabilities: Security patches and inappropriate updates on software and packages may cause significant damage to your running server.

#3. Regulatory and compliance challenges

• Variability in jurisdiction: Distinct legal systems in different places make things more difficult. It is not conventional but could be a hindering factor when hosting a blockchain server in your locale.
• Laws protecting data privacy: There are also certain laws put in place that allow you to abide by rules such as the General Data Protection Regulation (GDPR). It's geographically dependent.
• Financial regulations: Having to comply with changing rules while transacting with cryptocurrencies can also be a big hindrance.

#Conclusion

Now, you have learned all the important factors and considerations of hosting a blockchain server. You have also learned the benefits, challenges, and costs associated with hosting one. This will guide you in making optimistic decisions and get you started with hosting your blockchain server.