According to the data collected from Bitnode, the total
number of reachable Bitcoin nodes on the Blockchain fell by approximately
18.98% in 2018. A drop from 11,845 to 9,597 in the said period brought the
figure to 18.98% drop.
In that same period of time,
the total number of unreachable Bitcoin nodes
also fell by at least 33%, dropping from 98,000 to 65,500. For us to
understand why this data is significance, it is essential to show the functions
of both the reachable and unreachable nodes on the Bitcoin Blockchain.
Understanding the Reachable and Unreachable Bitcoin Nodes
A reachable Bitcoin node on the Blockchain is a node that
sends and receives connections via the Bitcoin network
. On the other hand, an unreachable node
can simply make outgoing connections but doesn’t have the capacity to accept incoming
connections. The reason why unreachable nodes cannot
accept incoming connections is that they are behind a firewall such as Tor or
they are shielded by a NAT (Network Address Translation) which modifies network
address data in the IP header for data packets while in transit via a router.
Bitcoin (BTC) Price Today – BTC / USD
Let’s take a look at this in theory, a high number of
unreachable exist on a Blockchain may be good news because it makes the network
one that is more secure by boosting the total number of obstacles that obstruct
a hacker, with a bonus of increased or
better resistance to deanonymization compared to its reachable counterparts.
However, in practice,
the reachable Bitcoin nodes play a significant role in the Bitcoin protocol.
The reason for this is because they are only able to function as complete nodes
which keep full records of all
transactions done on the Blockchain from the start. This, in turn, maintains higher integrity on the Bitcoin
In Theory, a Fall
in Reachable Nodes Could Trigger Increased Centralization
Typically, a fall in the number of reachable nodes can
potentially result in increased centralization
on the network if only fewer entities have control of the remaining full nodes.
And over time if left unchecked, this
could lead to 51% attacks and the scenario of double spends that would destroy
Bitcoin’s credibility. Although this is obviously far from happening and may
not happen realistically, it actually illustrates the impact of the bear
market crash on Bitcoin (BTC).
Chinese Bitcoin Nodes Recorded the Broadest Entry and
As CCN had earlier reported as a result of the continued
market rout, virtual currency miners are leaving the space on a high pace,
driven by the low or negative profitability issues to repurpose their mining
facilities for completely different uses
like video rendering and cloud computing or shutter them. Bitcoin (BTC) has
been affected directly by the drop in mining interest. It has recently adjusted
its difficulty downward by 7% to maintain a balanced hash rate.
While it is a difficult proposition to identify the entities
concerned, it’s more likely that the withdrawal of some smaller miners from the
Bitcoin Blockchain is what has triggered the drop in reachable nodes over the
past year. However, whether market conditions will improve in 2019 and
inevitably encourage a return of miners is still unknown as of this point.