Is declining number of peers (hosts) threatening the network?

Question

I found out here that the number of total network hosts basically went down to 1/3 during the last year. Does this mean the network is less secure because fewer people run it despite the total hashing speed is still growing?

Answer 1

Kozuch, you linked to another post that is related to this issue. However, your question and the linked post are two separate issues: the other question is asking why grow the amount of miners in the bitcoin network.

On the other hand, the question you asked is about the number of hosts. Specifically, peers, also known as full nodes in the bitcoin world. These are the people who run the full bitcoin client instead of multibit / electrum, which is the light client since they don't require hosting the blockchain.

The number of peers on the bitcoin network does not affect the security of the bitcoin network. Whether or not there is 1,000 people running full nodes or 100,000 people, it makes no difference to the security of the bitcoin network. What matters isn't the number of peers, but the number of miners.

I run a full node myself because I use Armory and Armory requires a full node. But I am not surprised that the number of people who run full nodes has gone down by 1/3 in the last year. There are two reasons for this: bandwidth and hard drive space. I have a 25 Mb internet connection now, which is fast enough that the bitcoin network almost never slows down my internet connection. But my old (much slower) DSL connection was immensely slowed down by the peer-to-peer bandwidth taken up by bitcoin.

A potentially bigger issue, at least for me, is hard drive space. The bitcoin blockchain was about 9 GB when I downloaded it in April 2013. I just checked my blockchain folder and it's now up to 20.9 GB, which is exponential growth in the size of the blockchain. My hard drive is only about 221 GB, with 98 GB free. I expect to get at least a couple more years out of my current computer, and if the blockchain continues its trend of exponential growth, I will eventually need to buy a bigger hard drive to continue hosting a full node.

So that's the long answer on why it's likely that the bitcoin network lost a lot of peers in the last year. Short answer? Running a full node is rather expensive in terms of bandwidth and hard drive space.