Mining is the process by which new blocks are created in the blockchain, and those blocks are filled with transactions. That’s the basic process of mining now; let me explain what actually mining difficulty means?
What is mining difficulty?
Mining difficulty is the difficulty level faced by miners to create a block for a blockchain. Here’s what happens behind the scene of block mining.
A blockchain’s fundamental aim is to create a consensus among many computers or nodes called miners. And in the case of cryptocurrency, this agreement is about how users have spent coins. This sounds pretty simple but hard to achieve. Why? Because the nodes are not always honest.
When you want to join a bitcoin network, you will look for the other nodes participating in these networks. But which network to join is a question here. Well, the general rule is that the longest valid chain is the right option. But the problem here is that attackers could fabricate the blockchain and add false transactions to make it longer. Hence everyone, including you, will think this is the right one.
To solve this issue, the creator of Bitcoin came up with the phenomenon that we call mining difficulty.
Why is mining difficulty needed?
- To maintain the integrity of the bitcoin network.
Satoshi came up with a solution that slowed down the time for creating a new block to prevent blockchain fabrication. He applied a proof of work algorithm to bitcoin mining, which means many computers do random calculations to solve a puzzle first.
This reduces the miners’ chances to solve the puzzle because, in the end, only one succeeds in the mining puzzle, and others have to start all over again. On average, one computer succeeds in solving a puzzle every 10 minutes and gets the reward. This 10 minute time delay makes it impossible to fabricate long blockchains.
- To maintain the hash rate
Slowing down the time for block creation wasn’t enough. Why? Because computers get efficient with time and can create blocks in less than 10 minutes, meaning their hash power is high. That means hackers can use some fast computers and again fabricate the blockchain.
To prevent this, the phenomenon “mining difficulty” comes into action. This level of difficulty controls how hard your computer has to work to mine a new block. This level isn’t a fixed number; instead, it is readjusted after every 2016th block. The system looks at how long these blocks took to create, and the time should be exactly two weeks.
- If more than 2016 blocks were created in two weeks, the difficulty level would be increased.
- If fewer than 2016 blocks were created in two weeks, the difficulty level would be decreased.
Why does the difficulty level need to be adjusted?
Computer’s operation upgrades are understandable, but obviously, this doesn’t happen every two weeks, so why there is a need to adjust the difficulty level every two weeks?
The reason is the number of miners. More miners mean a higher chance of someone creating a block in a shorter time and vice versa. Hence difficulty level is readjusted every two weeks. Like when China banned cryptocurrency, the number of miners went down significantly and consequently, the difficulty level also dropped by a record 28%.
Mining difficulty ensures that each block takes 10 minutes to create, no matter how fast the computers are or how many miners are involved. It helps to prevent the bitcoin network from malicious attacks.