What Is “Difficulty Adjustment” in a Proof-of-Work System?
Difficulty adjustment is a mechanism that automatically changes the mining difficulty of a cryptocurrency network. Its purpose is to maintain a consistent block production time, regardless of the total computational power (hash rate) on the network.
If the hash rate increases, the difficulty increases to slow down block finding, and vice-versa. This ensures predictable coin issuance and network security.
Glossar
Mining Difficulty
Calibration ⎊ This parameter serves as an automated feedback loop within Proof-of-Work systems, recalibrating the computational hurdle required to discover a valid block.
Predictable Coin Issuance
Issuance ⎊ Predictable coin issuance refers to the programmed, algorithmically controlled rate at which new units of a cryptocurrency are created and introduced into the circulating supply, typically as a reward for miners or validators.
Computational Power
Algorithm ⎊ Computational power, within cryptocurrency, options trading, and financial derivatives, fundamentally represents the processing capacity dedicated to executing complex calculations essential for network operation and trade execution.
Hash Rate
Power ⎊ Hash rate quantifies the total computational power dedicated to solving the cryptographic puzzle in a Proof-of-Work network.
Difficulty Adjustment
Calibration ⎊ Difficulty Adjustment represents a core algorithmic mechanism within proof-of-work cryptocurrency networks, dynamically modulating the computational effort required to mine new blocks.