{"id":253,"date":"2014-05-27T05:34:00","date_gmt":"2014-05-27T05:34:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/what-are-bitcoin-nodes-and-why-do-we\/"},"modified":"2014-05-27T05:34:00","modified_gmt":"2014-05-27T05:34:00","slug":"what-are-bitcoin-nodes-and-why-do-we","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/05\/what-are-bitcoin-nodes-and-why-do-we.html","title":{"rendered":"What are Bitcoin nodes and why do we need them?"},"content":{"rendered":"
\n(CoinDesk<\/a>) It\u2019s well known that bitcoin<\/a> is designed as a decentralized
\npeer-to-peer (P2P) network. However, what\u2019s often lost in translation is
\n the sheer amount of machinery that is needed to maintain this global
\ninfrastructure.<\/div>\n
\nFor example, in order to validate and relay
\ntransactions, bitcoin requires more than a network of miners processing
\ntransactions, it must broadcast messages across a network using \u2018nodes\u2019.
\n This is the first step in the transaction process that results in a
\nblock confirmation.<\/div>\n
\nTo function to its full potential, the bitcoin
\n network must not only provide an avenue for transactions, but also
\nremain secure. By using a number of randomly selected nodes, the network
\n can reduce the problem of double spending<\/a> \u2013 when a user attempts to spend the same digital token twice.<\/div>\n
\nHowever,
\n bitcoin doesn\u2019t just need nodes, it requires lots of fully functioning
\nnodes \u2013 nodes that have the bitcoin core client on a machine instance
\nwith the complete block chain. The more nodes there are, the more secure
\n the network is.<\/div>\n
\nThis is one of the reasons there is a plan to put bitcoin nodes in space<\/a>, and that the plan has important implications for bitcoin.<\/div>\n
\nThe problem is, the number of nodes on the network is dropping, and core developers believe it may continue to do so.<\/div>\n

\nWaning support<\/h2>\n
\nLooking
\n at a 60-day chart of bitcoin nodes shows that the number has gone down
\nsignificantly. It went from 10,000 reachable nodes in early March to
\nbelow 8,000 at the beginning of May.<\/div>\n
\n <\/div>\n\n\n\n\n
\"Source:<\/a><\/td>\n<\/tr>\n
\n

\nSource: Bitnodes<\/a><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\nWhat\u2019s
\n interesting is that during a recent 24-hour period, the number of
\nreachable nodes went down from 8,200 to 7,600 and back to 8,200 again.
\nThis suggests that a portion of users running nodes are turning off
\ntheir machines at night, meaning that this contingent of nodes are being
\n run on desktops or laptops.<\/div>\n
\n <\/div>\n\n\n\n\n
\"Source:<\/a><\/td>\n<\/tr>\n
\n

\nSource: Bitnodes<\/a><\/i>
<\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\nAnother issue is the geographic distribution of the nodes. The majority of reachable nodes are located in North America.<\/div>\n
\nIn Africa, where bitcoin could perhaps help people lacking access to financial resources<\/a> more than anywhere else, there is a regional paucity of reachable nodes.<\/div>\n
\n <\/div>\n\n\n\n\n
\"A<\/a><\/td>\n<\/tr>\n
\n

\nA map based on Bitnodes data. Source: Coinviz<\/a><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\nLack of incentive<\/h2>\n
\nUnlike bitcoin mining, where participants are rewarded for confirming transactions<\/a>,
\n running a bitcoin node does not provide any incentive. The only benefit
\n for someone to run a node is to help protect the network, and based on
\nthe Bitnodes data, the number of people interested in supporting the
\nnetwork with a full node is waning.<\/div>\n
\nThere could be a number of reasons for that.<\/div>\n
\nFor one thing, running a full node utilizes the resources of a machine for basically no monetary return. Plus, the collapse of Mt. Gox<\/a> has likely left many people with less desire to support the digital currency.<\/div>\n
\nFurthermore, the popularity of the bitcoin core client in China, where it was for a time<\/a> immensely popular, has tapered off given the contentious regulatory environment<\/a> there.<\/div>\n

\nCentralization of mining<\/h2>\n
\nIn
\n terms of supporting the bitcoin network, it used to be a lot easier for
\n the average user to participate. However, the advent of massive ASIC
\ndata centres has weakened the consensual nature of mining, and by
\nextension providing nodes, for many people.<\/div>\n
\nRoss McKelvie, lead engineer at bitcoin incubator Boost VC, believes that it will be larger operators with data centres like KnCMiner<\/a> that will have to pick up the slack in the number of bitcoin nodes, reasoning:<\/div>\n
\n
\n

\n\u201cAs
\n bitcoin grows, so does the network and the computing power behind the
\nscenes required to run it. The majority of bitcoiners won\u2019t be able to
\nsupport their own nodes and will be taken over by companies like KnC.\u201d<\/p><\/blockquote>\n<\/div>\n<\/blockquote>\n

\nKnCMiner is just an example of economics and logistics in the mining industry<\/a>
\n pushing bitcoin towards a more centralized future. McKelvie also
\nbelieves that major technology companies that take interest in bitcoin
\nwill have to put their computing resources behind the digital currency:<\/div>\n
\n
\n

\n\u201cI
\n wouldn\u2019t be surprised if we see large tech companies like Google and
\nAmazon throwing resources at bitcoin as they adopt the currency.\u201d<\/p><\/blockquote>\n<\/div>\n<\/blockquote>\n

\nFeedback from nodes<\/h2>\n
\nAs part of the bitcoin core developer team, Mike Hearn<\/a>
\n sees the issue of nodes dropping from 10,000 down to under 7,000 as a
\nsignificant problem. To Hearn, the core of the issue is disinterest in
\nboth expending computing resources and electricity toward something that
\n may have diminishing value.<\/div>\n
\nOn the bitcoin developer mailing list<\/a>,
\n Hearn has proposed added functionality that would allow communications
\nbetween nodes and the developers to better understand why so many are
\ndropping out.<\/div>\n
\nHearn also wants to exclude consumer wallets installed on laptops and desktops from the network as well.<\/div>\n
\nThis
\n is because their number will continue to decline no matter what \u2013 and
\nthey appear to only be working when users are awake during the day.<\/div>\n
\nOne of the reasons why lots of nodes are important is redundancy, according to Hearn:<\/div>\n
\n
\n

\n\u201cIt
\n makes [the bitcoin network] \u2018seem\u2019 bigger, more robust and more
\ndecentralised, because there are more people uniting to run it. So
\nthere\u2019s a psychological benefit.\u201d<\/p><\/blockquote>\n<\/div>\n<\/blockquote>\n

\nMoving forward<\/h2>\n
\nBitcoin core developer Jeff Garzik<\/a>
\n believes that community attention to the lack of nodes supporting the
\nnetwork is what the industry needs in order to boost numbers:<\/div>\n
\n
\n

\n\u201cI agree we need more full nodes. I\u2019ve long been a proponent of such calls for more nodes.\u201d<\/p><\/blockquote>\n<\/div>\n<\/blockquote>\n

\nHowever,
\n such calls for voluntary support might not be enough motivation for
\npeople to do so, though, so, one logical idea that has been floated is
\nto give nodes some sort of incentive.<\/div>\n
\nHowever, that\u2019s probably not
\n feasible right now: over the past six months, miners have been
\naveraging a daily reward of 15.98 BTC per day, according to Blockchain<\/a>.<\/div>\n
\nRecent
\n bitcoin prices would peg that value at around $7,040 per day for the
\nentire network \u2013 and the growth in transaction fees has been incredibly
\nflat over the past six months. As a result, miners would likely be
\nreluctant to concede any revenue to bitcoin nodes, which don\u2019t require
\npricey ASIC hardware to run.<\/div>\n
\n <\/div>\n\n\n\n\n
\"Transaction<\/a><\/td>\n<\/tr>\n
\n

\nTransaction fees on the network for past six months. Source: Blockchain<\/a><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\nMembers
\n of the bitcoin community seem to be losing interest in hosting full
\nnodes. And it\u2019s something to pay attention to, because over time it
\nmight mean that the major companies in the industry may have to pick up
\nthe slack.<\/div>\n
\nIf larger players are taking up the role of supporting
\nthe network as full nodes, though, it continues to lessen the amount of
\ndecentralization the network has at an infrastructure level.<\/div>\n
\nThis
\nis all down to circumstances surrounding bitcoin sentiment \u2013 the rise of
\n ASICs, the selloffs in China and complete collapse of Mt. Gox \u2013 plus
\nlittle in the way of incentives for someone to run a node.<\/p>\n
\nConnections image<\/a> via Shutterstock<\/i> <\/div>\n<\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

(CoinDesk) It\u2019s well known that bitcoin is designed as a decentralized peer-to-peer (P2P) network. However, what\u2019s often lost in translation is the sheer amount of machinery that is needed to maintain this global infrastructure. For example, in order to validate and relay transactions, bitcoin requires more than a network of miners processing transactions, it must broadcast messages […]<\/p>\n","protected":false},"author":1,"featured_media":821,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,76,82,625],"tags":[764,771,1279],"yoast_head":"\nWhat are Bitcoin nodes and why do we need them? -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/holytransaction.com\/blog\/2014\/05\/what-are-bitcoin-nodes-and-why-do-we.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What are Bitcoin nodes and why do we need them?\" \/>\n<meta property=\"og:description\" content=\"(CoinDesk) It\u2019s well known that bitcoin is designed as a decentralized peer-to-peer (P2P) network. However, what\u2019s often lost in translation is the sheer amount of machinery that is needed to maintain this global infrastructure. 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