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I keep hearing about the benefits of running your own node and would like to. I have one computer with a new enough OS to install one, but I also use the computer for business and I hear about the cons of running a node from a security standpoint. I want to run a pruned node. What’re the benefits vs cons cause I’m not sure I even need one. No, I do t fully understand it all yet. Thanks

What did you hear? Is it about sharing your IP with other nodes (solution: use VPN/Tor), or is it about the risk of getting your funds stolen (solution: don't keep high value in a hot wallet).

It depends: what wallet are you using now?

The benefits of running a pruned node are about the same as running a non-pruned node: Privacy as you rely on no third parties, security as it protects you against fraudulent activity, self-sovereignty as you get to verify the transactions and don't trust anyone, and freedom to enforce the rules you're agreed upon.

Make sure you do. You don't want to either lose money or somehow make things worse, which is common if you proceed in something you don't understand.

This might help you: https://www.lopp.net/bitcoin-information/full-node.html

There are generally no security risks associated with running a full node. Some businesses have had their hot wallets hacked, however their servers were not a target because they were running a full node, they were a target because they had private keys associated with large amounts of coin.

Running a full node will consume resources. Depending on what type of business you are conducting on your computer, and how critical it is to maximize your various computer resources, it may be better to use another computer/server to run a full node.

In general, running a full node will maximize your privacy associated with using bitcoin. It is however resource-intensive if you want to import a private key associated with an address that has previously received transactions, and especially so if you are running a pruned node.

I use cold storage and multi sig at the moment. I do consistently use a VPN. I don’t know how to use a Bitcoin core wallet yet (hot wallet?) and don’t use electrum or Spector. Not currently. I hear how bitcoiners should be running their own node. That concept is foggy to me. Isn’t that risky?

Yep, that’s what I heard. That’s what makes me interested. Thank you for the learning link.

What software did you use to create your cold storage, and what do you use to make a transaction?

A "hot wallet" means it's connected to the internet (or has been in the past).
Bitcoin Core is easy: install it (link on top of this page), download 440 GB, and create a wallet (and a few backups).

All software has risks. The trick is finding what works best for your situation. I use many different wallets, depending on the purpose.

I hear a lot of things ;) It helps to also hear the "why" part.
I believe Bitcoiners should use whatever software works best for what they need.

Oh ok, I understand. I want to run a pruned node and I don’t plan on using a Bitcoin core wallet, or wallets that work with nodes, unless I should? Or with a small amount? Or……. I am currently in cold storage. Is a core wallet considered hot?

What exactly are you trying to accomplish? There's no point running a pruned Bitcoin Core installation if you don't intend to use Bitcoin Core as a wallet.

Using a combination of ledger, Trezor, and collaborative custody multisig. You are correct, “the why” is more important than the how. That’s what I’m battling. Does the benefit outweigh the risks and is it better than what I’m doing now. I don’t know enough to make that decision. I’ve researched the hell out of it and it all sounds so complicated.

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I can, but not yet. I don’t know enough. There are stories of people doing it wrong or a setting isn’t right etc, and they get funds stolen. So, I’m on the fence till I learn more.

[moderator's note: consecutive posts merged]

For the record: a hardware wallet connected to an online computer isn't considered cold storage.

If you're using a hardware wallet now, switching to Bitcoin Core on a computer connected to the internet is not going to make your funds safer. It's less safe. But you get more privacy for it, as Ledger or Trezor can no longer know what you own.

Let me ask another question: what benefit do you hope to get from changing wallets?

People have gotten their funds stolen when they enter their hardware wallet's seed phrase into a phishing site too. No storage system is perfect, especially when the owner makes (dumb) mistakes.
I'd say don't keep more funds in any hot wallet than you're willing to risk. The same goes for funds on exchanges.

In general, especially for unexperienced users, a hardware wallet is safer and easier to keep safe than Bitcoin Core.

It sounds like you are interested in the benefits of being able to verify all blocks and transactions yourself (and therefore not having to trust third parties), as well as the increased privacy that can come with running your own node. However, your current wallet set up (not entirely clear, but some combination of hardware wallets and multi-sig) sounds like it is much safer than a standard Bitcoin Core hot wallet, and so running your own node won't improve on the security of your coins.

Here's what I would do:

• Download Bitcoin Core and run a full node*
• Set up your own personal Electrum server
• Use your hardware wallets via Electrum, pointed exclusively at your own Electrum server

This gives you the privacy and verification benefits of running a node, while still keeping your coins within a more secure hardware wallet set up. However, the combination of a full node and an Electrum server does require sufficient hardware and storage space to run effectively.

*Running a pruned node is a possibility, but you'll need to make sure that Core knows all your addresses in advance so it can scan them as it goes before it starts pruning blocks. And if you ever create a new address in any of your wallets (or any new wallets), then you won't be able to sync it using a pruned node without downloading the entire blockchain again.

Perfect!! So it would run counter to my already paranoia. That not only answers my question but also solidifies my decision. Lol. I really just wanted to support the network and was on the fence about the core wallet. I wouldn’t then use the core wallet and the is be running a node for it just to sit there and look pretty and not really use it. Thanks for all of the clarity. I’ll just stick with my cold storage and multisig. Thanks again.

It seems you bit confused about the full node and pruned mode if you are going to install Bitcoin core by default it is set to 10GB pruned mode the Bitcoin core will only download 10GBs of blocks. There are no benefits to having a pruned node the security of your wallet always depends on how you protect your PC and it is running just like an ordinary wallet the only problem is it only downloads the block history that includes your transactions and it's not syncing from time to time if there is a new block coming.
Pruned node RPC commands on the console also do not work.

Unlike having a full node it is syncing from time to time and all commands from the console should be working the only problem is you will need to download the entire blockchain and you need to keep your PC online and connected to the internet.

Take note you can also make pruned node as your cold storage and never connect it again to the internet after you installed and downloaded a few blocks.

It will only keep 10 GB of blocks. It will still download them all in order to verify the entire history of the blockchain.

Again, a pruned node will still download all blocks (otherwise how would it know which blocks contain your transactions). Rather, it will only store the history of the addresses you have told it to.

If you want to use Bitcoin Core as cold storage, then (as with any cold storage) it should never connect to the internet at all. There is no requirement for the software to download any blocks in order to create a wallet.

As already said, you have no cold storage in your setup. So for now the risk I see is you, no offense: the risk is that you think you know some things and you may not actually know them, hence doing mistakes because of some assumptions you may make. My advice is to read more, much more.
Hardware wallets are not unsafe, but they're not cold storage either. (Cold storage never connects to internet. Ever. Hence it's also not synced, but that's OK.)

Now, about "the why". If you use Electrum, or Ledger Live, for example, these are wallets that connect to servers and exchange information. This means that the owners of the servers can easily see what are your addresses and what funds you have. If some of that ever goes (or ever went) without your VPN, then they'll also correlate with your IP.
Some find this a problem. Some don't. It's up to you. This is the most important "why" in this equation.

Then, the only time I've tried to connect my Ledger to Bitcoin Core I failed. It should be, in theory, possible, but it may (still) not be straightforward. So you may need a more complicated setup and a pruned node may not help in this/may not be enough. I have my own setup with full node (on a separate HDD) and a local Electrum server, since Electrum is friendly enough with my Ledger. As said, a pruned node still downloads the entire blockchain, just doesn't keep it all on your disk. Even more, a pruned node services one wallet; if you for some reason want to switch to another wallet you may have to re-download the whole blockchain (and since I do make tests now and then, this is a no-go for me).

If you only use one wallet, maybe a setup with Bitcoin Core (pruned) and Sparrow wallet would do. But you have to check for yourself...

This got me thinking: does a pruned node even contribute? I guess it can still upload the latest blocks to other nodes, even though it doesn't have older blocks. If that's the case, you can run it without using it as a wallet.

I've just started this on a dedicated server (which I got sponsored and is mainly idling):
That's 6 GB dbcache, 50 GB prune (unfortunately I can't spare disk space for a full download), and tries to limit upload bandwidth to 500 GB/day. I've never used bitcoind on the command line before, so I'm not sure if this will even upload blocks. But if it does, I'll keep it running :)

This thread from bitcoin.stackexchange might help: https://bitcoin.stackexchange.com/a/101691 (https://bitcoin.stackexchange.com/a/101691)

You can also use bitcoin-cli getnettotals to see how much data your node has already sent to its peers in the current cycle.
AFAIK, it's all of Bitcoin Core's network traffic so mempool might be included in the result.

Thanks, Murch's post (https://bitcoin.stackexchange.com/questions/101672/does-running-a-pruned-node-support-the-syncing-of-other-nodes-in-the-network/101691#101691) explains it:
I've reduced my pruned node to 1 GB, so it can fit everything in RAM.

Yep, this is nuts already. Command line stuff. Sounds nice and complicate. I’ll stick with what I have. And hardware wallets with a secure element is considered cold storage. For whoever said it’s not. Thanks for all of the input guys and gals.

My pruned node finished syncing in about 10 hours (with HDD, Xeon and 16 GB RAM). It's now uploading around 15 MB per hour, so it looks like it's going to be around 10 GB per month.
A quick check after a restart shows it's downloading more than it's uploading:
If it stays that way, it doesn't provide a net contribution to bandwidth.

Update: it's uploading more than it's downloading:
That means I'm contributing bandwidth :D

A HW wallet is "technically" not cold storage if you connect the HW wallet to a computer that is connected to the internet. With that being said, a HW wallet is only going to be marginally less secure than "true" cold storage. For most individual users, a HW wallet is going to provide more than enough security to keep your coin safe.

For educational purposes, could you give me an example of true cold storage? An air gapped device? Just curious.

https://bitcointalk.org/index.php?topic=5400742

"Cold storage" is a device that is never connected to the internet, nor is it directly connected to something that is connected to the internet.

Generally, you will need to purchase a new computer, never connect it to the internet, and install your wallet software (and OS if applicable) via some intermediary device. You will also need to transfer your unsigned transaction to your cold storage device via an intermediary device, sign the transaction, and transfer the now-signed transaction back via an intermediary device.

*Provided that you don't do stupid stuff like typing your seed phrase on websites.

Seriously. I don't know why so many "experienced" people manage to fall for this. Do their hardware wallets fail to warn them never to write the seed phrase on the internet?

Just an update: I ended up doing just that. Installing an umbrel full node on Rpi and using sparrow multisig connected to personal electrum server. That was fun. Now i fell down the frustrating to understand the lightning rabbit hole.