What Is the Purpose of the “Difficulty Adjustment” Algorithm in a PoW Blockchain?
The difficulty adjustment algorithm is a mechanism that automatically changes the difficulty of the mining puzzle. Its primary purpose is to maintain a consistent block production rate, regardless of fluctuations in the total network hashrate.
For example, in Bitcoin, the algorithm aims to keep the average time between blocks close to 10 minutes. If more miners join, the hashrate increases, and the difficulty rises to slow block production back down.
If miners leave, the difficulty decreases.
Glossar
Algorithm
Framework ⎊ Within cryptocurrency derivatives and options trading, a framework denotes a structured computational process designed to model, predict, or automate trading strategies, often incorporating elements of quantitative finance and market microstructure.
Difficulty Adjustment
Mechanism ⎊ Difficulty adjustment is a crucial mechanism in proof-of-work PoW blockchain networks, particularly Bitcoin, that automatically recalibrates the computational effort required to mine a new block.
Difficulty Adjustment Algorithm
Algorithm ⎊ The Difficulty Adjustment Algorithm (DAA) is a core mechanism within proof-of-work (PoW) cryptocurrency blockchains, primarily designed to maintain a consistent block generation rate irrespective of fluctuating network hashrate.