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Bitcoin nodes more often anonymous on TOR


Nodes on the Bitcoin blockchain are becoming anonymous because they are using the TOR network, also known as The Onion Router Network. In the first two weeks of January 2020 the number of bitcoin nodes on the anonymous network went from 2.1 percent up to 19.7 percent. It’s the highest contribution the TOR network has ever had to Bitcoin, according to data from Bitnodes.

A particular reason for this increase isn’t known. However, the privacy-minded TOR network has been a helpful tool in dealing with network problems while setting up a node. When someone is setting up a Bitcoin node, it’s quite a hassle to make sure other nodes can see it. They need to set up port forwarding on their routers, which is different for every router. TOR routes around this problem altogether. All users would need, is a TOR browser.

The amount of Bitcoin nodes on the Onion network went up from approximately two hundred to almost two thousand. It’s been possible to run Bitcoin nodes on TOR for years, and there have been increased peaks in usage. For example during the summer of 2019 the use of Bitcoin nodes on TOR tripled, but after two weeks these numbers dropped again.

While the number of nodes on the TOR network grew in the past weeks, IPv4 and IPv6 nodes dropped in numbers. It’s unknown where these TOR nodes are really located. However, while the TOR network increased its presence on the Bitcoin blockchain, countries like France, Germany and The Netherlands have seen an one percent decrease. So have a guess about the location of some of the new TOR nodes.

Bitcoin blockchain stronger than ever

It’s important to have lots of computers mining bitcoin, because it makes the Bitcoin blockchain stronger. The more computers are involved in the mining process, the more difficult it becomes to perform a 51 percent attack on a blockchain.

Currently the Bitcoin network hash rate has reach an all-time high of 126 quintillion hashes per second. One year ago the network had only 38 quintillion hashes per second. In September Bitcoin broke the magical 100 quintillion h/sec mark, needing only four months to add another 25 percent and reach the new all-time high.

While the network almost quadrupled its computer power, the value of bitcoin stayed behind. However, bitcoin mining is a billion dollar industry and the companies investing in mining are doing this for the long term. It’s a bullish signal for the value potential of bitcoin.

Some argue that all the mining power is a waste of energy. However, cryptocurrency professor Andreas Antonopoulos argues that it’s not a waste, but an investment in the security of a financial network. Antonopoulos sees mining as the effect of market conditions. It’s a profitable business and therefore there are developments in the optimization of the mining process.

In approximately four months the mining rewards will halve. This could mean that some of the mining companies will close, because they aren’t being profitable anymore. But because there are less rewards, and demand stays the same, the price of bitcoin could go up. If this second scenario plays out, the mining competition will only get more fierce in the months to come.

Also published on Medium.

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