Number of Reachable Bitcoin Nodes Dropped by 19% This Year

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
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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 Blockchain.

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 Exit Variations

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.

Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.

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