The Problem with Full Node Wallets
Tags: cryptocurrency, blockchain, bitcoin, btc
Published: 2024-01-23 07:40:40

[The Problem with Full Node Wallets ](https://finrock.io/)

[In the rapidly evolving world of cryptocurrency](https://finrock.io/), the allure of self-hosting and having complete control over digital assets is undeniable. However, this path is fraught with complexities and risks that are often underestimated. In this blog post titled "Finrock versus Self-Hosting", we delve into the challenges and pitfalls of managing your own digital wallet and blockchain infrastructure. From the vulnerability of private keys and the danger of becoming a single point of failure, to the continuous demands of regular maintenance, feature deprecation, and stringent monitoring and compliance requirements, this comprehensive examination sheds light on the following critical considerations every business must contemplate before venturing into the world of self-hosting.
Unreliable
Private keys of all the addresses generated within a digital wallet are stored in a single data file, and whilst encrypted, this can pose several challenges:
Regular backups are necessary, but generating new addresses constantly adds private keys to the file, making it difficult to ensure complete coverage.
Relying on passwords for encryption isn't ideal, as one may forget, potentially locking a business out of funds stored in the file.
Issues like software bugs, CPU spikes, memory leaks, disk problems, inconsistent peering, and data accuracy across multiple nodes can further compromise security.
Single Point of Failure
Without costly failover nodes, businesses risk long downtimes during blockchain node maintenance. As business grows, you will also need to scale staffing to maintain a fleet of reliable self-managed nodes to guarantee uptime and capacity to support additional users.
Regular Maintenance
Running your owned full node requires dedicated hardware (e.g. RAM, storage, etc.) to download, validate, and store transaction information. Maintaining hardware to support changing product usage levels is essential to balance capacity and fault tolerance for your customers without overspending.
Blockchain protocol updates require regular updates of the node client software, which usually exposes businesses to critical risks when using deprecated/outdated client software; these should be upgraded regularly, which requires additional DevOps resources.
Requires programming skills
A major disadvantage of hosting an independent node is the high-level networking & network security skill requirement, meaning that each site reliability engineer has to understand how to maintain nodes and be familiar with specific hosting needs while filling in other knowledge gaps. Essentially, a self-hosted node requires time, money, a professional DevOps team, and a large amount of dedication.
Feature Deprecation
Open source projects, driven by community consensus, often deprecate features or introduce breaking changes. Inadequate client updates can result in business losses and require product integration adjustments.
Monitoring & Compliance
Expanding infrastructure means more compliance and monitoring requirements, potentially increasing costs, complicating licensing, and jeopardizing compliance certifications such as ISO/SOC2 especially if auditors lack blockchain expertise.
Conclusion
Whilst self-hosting offers a sense of autonomy and control, it is imperative to weigh these benefits against the substantial challenges it presents. It is a complex endeavor with significant risks and maintenance demands. Let Finrock guide you to a better way of management; reach out to explore safer