How Is the ‘Difficulty’ of a Cryptocurrency Network Adjusted over Time?
Network difficulty is a measure of how hard it is to find a hash below a certain target. It is automatically adjusted by the network's protocol to ensure a consistent average block time, regardless of the total hash rate on the network.
For Bitcoin, this adjustment happens roughly every 2016 blocks, or about every two weeks. If the time between blocks is too fast, difficulty increases; if too slow, it decreases.
Glossar
Difficulty Target Setting
Calibration ⎊ The protocol-driven calibration of the difficulty target is designed to maintain a consistent block creation frequency, irrespective of fluctuations in total network hash rate.
Proof of Work
Consensus ⎊ Proof of Work establishes trust in a decentralized network through computational effort, fundamentally altering the cost structure of digital consensus.
Proof of Work Adjustment
Difficulty ⎊ ⎊ Proof of Work adjustment mechanisms dynamically recalibrate the computational intensity required to validate blockchain transactions, responding to fluctuations in network hashrate to maintain a consistent block creation time.
Network Difficulty Growth
Dynamic ⎊ Network difficulty growth describes the automatic adjustment mechanism in proof-of-work blockchains that increases the computational complexity required to find a new block.
Network Difficulty Calculation
Calculation ⎊ The network difficulty calculation is the cryptographic process by which a blockchain protocol determines the target threshold for a valid block hash, directly governing the computational effort required for block discovery.
Risk Adjusted Return on Capital
Metric ⎊ Risk Adjusted Return on Capital (RAROC) is a sophisticated quantitative metric used to evaluate the profitability of a trade, strategy, or investment relative to the economic capital required to support its inherent risk.
Proof of Work Difficulty
Energy ⎊ The current setting dictates the necessary aggregate computational expenditure required to secure the network against malicious actors attempting to rewrite transaction history.
Network Difficulty Level
Computation ⎊ Network Difficulty Level, within cryptocurrency systems, represents a quantitative measure of how challenging it is to find a new block; it directly correlates to the hashing power deployed on the network, influencing block creation time and security against attacks.
Mining Difficulty Dynamics
Algorithm ⎊ The mining difficulty dynamic, inherent to proof-of-work cryptocurrencies, represents a self-adjusting mechanism designed to maintain a consistent block generation rate irrespective of network hashrate fluctuations.
Cryptocurrency Difficulty Target
Parameter ⎊ The Cryptocurrency Difficulty Target represents the threshold value that a newly mined block's hash must be less than or equal to for the block to be considered valid by the network.