Bitcoin Price Recovery Alongside Network ChangesThe Bitcoin price came back from the brink this week, reaching nearly $4,000 by Sunday. Analysts were at times throughout the week worried that it would lose support around $3,400 and then drop beneath $3,000, but this hasn’t happened.
At the same time, however, two important Bitcoin network metrics saw reduced performance over the week. For one thing, mining difficulty – which signifies the number of miners on the network – dropped by 7% during the week. David Hundeyin explained:
In the light of the bitcoin blockchain’s reduced hashrate caused by withdrawing miners, the network is designed to automatically adjust the difficulty level in order to avoid a situation where there is a huge transaction confirmation backlog and high confirmation fees. The 7 percent drop in difficulty is likely to be the start of a similar difficulty readjustment pattern as bitcoin below $6,000 increasingly becomes a prolonged reality.
The number of reachable Bitcoin nodes also dropped, meaning that a number of people have shut off their full nodes. This number is harder to discern, as not all full nodes are mining nodes, but certainly the miners no longer mining are represented in this figure. As CCN writer David Hundeyin wrote:
A falling number of reachable nodes could theoretically lead to increased centralization of the network if fewer and fewer entities control the remaining full nodes. Overtime if unchecked, this could at least on paper lead to 51 percent attacks and the nightmare scenario of double spends which would destroy the credibility of bitcoin. While this is obviously very far from happening and realistically not very likely, it does illustrate the impact of the continued bear market on the bitcoin blockchain.
Reference:
https://www.ccn.com/bitcoin-network-loses-nodes-and-difficulty-militants-use-crypto-in-struggle-to-secede-nyu-professor-goes-off-the-rails-and-more-last-week-in-crypto/
