What Is Umbrel and How Does it Work?

We have heard that it is now possible to run a node using Umbrel. Umbrel is a software company that lets users run their own Bitcoin and Lightning Network nodes using very simple and easy-to-get hardware. 

Thanks to the solutions offered by Umbrel, it is now easier to run and operate a Bitcoin node. Indeed, it has never been easier to run both a Bitcoin and a lightning network node directly from your home and in just a few simple steps. 

In the next few sections, we are going to tell you what Umbrel is and how it works. Moreover, we will get into the details of Bitcoin nodes and how you can get the most out of them. This guide will help you understand why you need Bitcoin nodes and how you can start running your own node in minutes. 

What is a Bitcoin Node?

Let’s start from the beginning: what is a Bitcoin node? A Bitcoin node is a computer or device that holds the Bitcoin blockchain and helps validate transactions. Bitcoin nodes can be considered full nodes (if they hold the entire copy of the blockchain) or simply light nodes (when they hold just recent transactions). 

Bitcoin nodes are a key part of the BTC network as they validate the transactions and make sure that the network follows the same standard. Before each transaction is added to the blockchain, it is necessary to be validated by a Bitcoin node. 

One of the most common questions about nodes is whether they earn money or not. The truth is that running a Bitcoin node does not bring any financial advantage to users. Indeed, there are no payments for users that run a node. 

What a node does is protect the network against invalid transactions that could be processed by the network. In this way, nodes make sure that only the transactions that follow Bitcoin’s consensus would only be approved and added to the blockchain. The larger the network of nodes and their decentralization around the world, the more robust and secure the Bitcoin network becomes.

Nowadays, there are different guides that would help people run their own nodes. Usually, running a node was only for tech-savvy people or companies working in the industry. Nowadays, running a Bitcoin node is much more accessible and easy for investors around the world. 

Users that want to make the Bitcoin blockchain network more secure and decentralised should definitely run a node. In this way, users would be able to realize the importance of being an active part of the network and how they can make it more secure over time. 

What is Umbrel?

Umbrel is one of the latest implementations to let users run their own Bitcoin nodes in just a matter of minutes. Umbrel is a company that offers software solutions for users that want to easily manage and handle their own nodes. It lets users run their personal servers with a Bitcoin and Lightning Network node directly from their home and self-host open source applications. 

This is one of the easiest ways to break away from large technology companies and create a new type of ecosystem among Bitcoiners. Everything is provided by Umbrel for free directly from their website. Thanks to these solutions, Umbrel lets you build your own Bitcoin node in minutes by following a few simple instructions. 

As Umbrel explains on its website, all our interactions online with the internet are currently mediated by a few companies that offer “free” services. But of course, we are giving them our data and information. They are basically spying on us, which is not great for privacy. Usually, Bitcoin investors have a special focus on privacy, this is why it is very important to understand why a Bitcoin node matters. 

Thanks to Umbrel, users can change the way in which they deal with tech companies. It is possible for users to store photos, videos and files, among other things. However, by using traditional servers we are giving our data to these corporations. It is now possible to have a private life using Umbrel. 

One of the main things that you can do with Umbrel is run a Bitcoin and Lightning Network node. Thanks to these nodes, every single transaction is verified and added to the blockchain network. Umbrel is helping the cryptocurrency industry focus on the motto: “don’t trust, verify.” 

What do I need to run Umbrel on my node?

The Bitcoin community has always been in favour of making it easy and cheap for users to run their own Bitcoin nodes. This is why the things that you need to build one are not so expensive for most people in Western countries. 

The goal is to keep it as cheap as possible to make the network as decentralized and accessible to everyone as possible. Therefore, Umbrel has created a very easy-to-follow guide with all the things that you need to run Umbrel on your node. 

First of all, you will have to buy all the necessary hardware. Secondly, you will be able to install Umbrel and make it run on your local server. 

You need the following things:

• Raspberry Pi 4
• 1TB (or more) SSD 
• SSD Enclosure
• 16GB (or more) microSD
• Power Supply
• Ethernet Cable
• Case

This is the recommended hardware that you can see on the official website of Umbrel. They are also sharing different steps on how to install each of these devices in order to have a running full Bitcoin and Lightning Network node at home. 

The whole installation process should take just a few minutes. However, downloading the blockchain might take a few days, depending on the hardware that you purchased and the internet speed that you have at home. That being said, this would give you the possibility to run a Bitcoin node and help the network become more decentralized and secure over time. 

It is worth taking into consideration that you can use other hardware if you have one. This is just the recommended setup that is shared by Umbrel. Focusing on space and ram could be a good thing if you have better options. 

Umbrel Apps

Users can also use a wide range of applications that will then be downloaded to their Umbrel software on the node/server. Some of these applications include BTCPayServer, Element, PhotoPrism, BTC RPC Explorer, Samourai Server, Pi-Hole, Ride the Lightning, Lightning Terminal, Nextcloud, Sphinx Relay, Mempool, Gitea, Vaultwarden, LNbits, SimpleTorrent and many others. 

These applications have not been created by Umbrel, indeed, they are open-source and created by the community that continues to grow not only in the Bitcoin community but also around those investors and users that care about privacy. 

In addition, it is possible to get your app on the Umbrel App Store. Users can use any programming language, database or framework to build their apps for Umbrel. In this way, they will get them in front of thousands of users on day one. 

Umbrel offers privacy by default, with all the system services on Umbrel using Tor by default. This preserves anonymity and users’ information at all times. Moreover, the node can be accessed from anywhere in the world using a Tor-enabled browser. 

Additionally, Umbrel users can easily monitor everything directly from the node. For example, you can check the RAM usage, disk usage, and even the temperature of the CPU. In this way, you get all the detailed information that can help you get the latest data about your Umbrel node. 

Another important thing that is worth taking into consideration is that Umbrel is free and open. It is available for free and all the source code is available on GitHub. In the future, there could be new apps released on top of Umbrel and users could be using new features and services offered by other creators and developers. 

What is the Lightning Network?

We have also heard about the expansion of the Lightning Network in the past. The Lightning Network has been selected as the method to help the Bitcoin network expand without having to face scaling issues. 

The Lightning Network allows users to send and receive payments off-chain (outside of the Bitcoin blockchain) in seconds (instantly) and without having to be worried about fees. This is one of the best ways to send and receive small amounts of BTC for users all over the world. 

Additionally, thanks to the Lightning Network, the Bitcoin node now requires less space than a network with larger block size. In the past, the discussion in the Bitcoin community was to increase the block size and make it possible for Bitcoin to make it faster and cheaper to send on-chain transactions or to use the same 1 MB block size and rely on off-chain solutions such as the LN. 

Thanks to the Lightning Network becoming every single month larger, it is now possible to run a Lightning Network node and make the network even stronger. The larger the network of nodes running on the LN, the faster and cheaper transactions will be processed on top of it. 

Therefore, the Lightning Network became the selected option in the cryptocurrency market to scale Bitcoin. Despite the fact that it is not yet used as much as the Bitcoin network, several companies are working in order to expand its usage, including in places like El Salvador. 

Once transactions are processed using a Bitcoin node, it is possible to settle them on-chain. Then, channels are closed and all the funds are reconciled with the Bitcoin blockchain network. This reduces congestion on the Bitcoin network and opens a large number of possibilities for developers and users. 

Lightning Network Node

So then, how to run a Lightning Node on your Umbrel server? This becomes very easy and it does not require additional knowledge from your side. If you have followed all the steps to download Umbrel and run your own Bitcoin node, automatically, you will also have installed a Lightning Network node. 

This is basically an ultra-cheap and instant way to send and receive Bitcoin using your node working as an LN node as well. Umbrel offers you an out of the box solution to be part of the LN community and be able to expand the network even further. 

In order to run your Lightning Network node, you would not need anything else more than your Raspberry Pi with Umbrel installed on it. This is the easiest way for you to get access to the second-layer scaling solution that is being developed on the Bitcoin network right now. 

Getting early access to it would be one of the best things to do. This will give you an advantage over those users that still do not know how to handle an LN transaction or invoice. Additionally, you also gain the necessary technical knowledge to fund channels, manage payments and settle transactions on the Bitcoin network, among other things. 

Benefits of Running a Node

There are many benefits of running a Bitcoin node using your Umbrel server. The first and most obvious is the fact that you are now becoming more self-sovereign. You are your central bank. You can check and analyze the blockchain without having to rely on third parties that could use your information and data. 

Additionally, you are making the Bitcoin network more secure and decentralized. By having a larger number of nodes distributed all over the world, it is more difficult for a country to attack the Bitcoin network. The full blockchain and its information is going to be stored all over the world in inexpensive computers and servers that run Umbrel. 

There are many other benefits of running a Bitcoin node using an Umbrel server. For example, you get a Lightning Network node out of the box that could help you better understand the Bitcoin network and the scaling proposal to make BTC faster and cheaper. 

Additionally, you get the technical knowledge to run and understand how Bitcoin works. You will not only be able to use the node, but you will also understand how to build it and which are the main components of the Bitcoin network. This knowledge will be very useful for you in the future as well.

Finally, users can also get enhanced privacy. This is not a minor thing. Rather than sharing information with the network about your transaction and funds sent and received, you will now be able to route your payments using Tor, which protects your identity online. In this way, you will not only be protecting the Bitcoin network but also your privacy and information.