Decreasing Number of Full Nodes in the Bitcoin Network
The number of active reachable full nodes in the Bitcoin network continuously declined over the last years due to a lack of monetary incentive. Having a larger number of nodes which replicate the blockchain and accept valid blocks is essential for the protocol to work in a distributed manner, though.
For a blockchain to be tamperproof regarding the validation of data, it is essential to have a high enough number of participants, i.e. nodes, that replicate the data and check new data proposed by the miners. “High enough” amount of nodes in this case means it should correlate positive to the number of transactions mined in the network, because there are more stakeholders involved. But, the number of active reachable full nodes in the Bitcoin network continuously declined over the last years compared to a steady growth of transactions in the network. Mining a new block is rewarded, but validating its conformity to old blocks by keeping a replica of the whole chain isn’t. That’s why large mining pools are created to increase the power in the network by mining more blocks. This is a form of centralization and splits up the nodes in two distinct roles in the network.
A higher number of non-mining full nodes, which do not create new blocks, mitigates the possibility for fraud of the centralizing mining full nodes and makes the network as a whole balanced (=distributed) and stable.
One exemplary solution could be to monetary incentivise active full nodes that don’t mine. DASH does this by the same amount as mining receives, namely each at 45% of all new coins emitted. To not get the network over flooded by nodes, they have to have a stake of value stored to become a master (=full) node.
Number of active Nodes Last Year: https://bitnodes.21.co/dashboard/?days=365
Details to different Nodes: https://coin.dance/nodes
Number of Transactions: https://blockchain.info/charts/n-transactions?timespan=all
DASH Overview of Masternodes and Proof of Service: https://www.dash.org/masternodes2/