...by Daniel Szego
"Simplicity is the ultimate sophistication."
Leonardo da Vinci

Saturday, August 4, 2018

Bitcoin difficulty and on-chain governance

In the bitcoin protocol there is a part which automatically adjust difficulty in a way that the block time is always fine-tuned to 10 minutes blocktime. If the current rate of blocks is faster than 10 minutes, than the difficulty is increased, if it is slower, the difficulty is decreased. Similar ideas can be found in other blockhain solutions as well, like Ethereum or Monero. This mechanism can be thought as a kind of a on-chain governance method where practically the miners with computation as a scarce resource vote for the change to take place or not.