29. September 2023

Data Shows Growing Demand for Privacy on Bitcoin Network

• Data gathered from Bitnodes API shows that most bitcoin nodes are routing traffic through the anonymous overlay network Tor.
• Node location, internet service and hosting providers play a critical role in maintaining the security and reliability of the Bitcoin network.
• Recent data reveals the importance of privacy and anonymity among the more technical users of the Bitcoin network.

Bitcoin is a decentralized digital currency that relies on nodes to verify and propagate transactions on its blockchain. To ensure its network continues to grow and evolve, node location, internet service and hosting providers play a critical role in maintaining the security and reliability of the network. To prevent any regulatory action from having a significant impact on the network, nodes should be widely distributed and not concentrated in one location.

Recent data gathered from the Bitnodes application programming interface (API) shows that most bitcoin (BTC) nodes are routing traffic through the anonymous overlay network Tor. This signifies the growing importance of privacy and anonymity among the more technical users of the Bitcoin network, as well as the decentralized nature of the blockchain’s infrastructure. The data also revealed that a significant portion of bitcoin nodes — 8,162 out of 14,838, nearly 82% — cannot be accurately located due to them routing their traffic through Tor. This is a rather positive data point considering that those nodes are likely to ignore any local regulation. In addition, the portion of nodes operating through Tor has steadily increased from about 25% of all the nodes one year ago, after a bug led to them crashing.

The Tor network, also known as The Onion Router, is an anonymous overlay network that allows users to hide their online activity from their internet service provider and local network. It is composed of volunteer-run nodes that send encrypted data in multiple layers to its destination. This makes it difficult for anyone to track user activity and allows users to remain anonymous while using the internet.

Overall, the data gathered from the Bitnodes API allows us to gain a better understanding of the Bitcoin network and the importance of privacy and anonymity when using it. This is a sign of the decentralized nature of the blockchain’s infrastructure and the growing demand for more secure and reliable ways to use the network. As the Bitcoin network continues to grow, the use of Tor and other methods of protecting user privacy will most likely increase as well.