In cryptocurrency, the term difficulty refers to the effort required to mine a block
. Proof of Work blockchains
implement certain rules that cause this to rise or fall depending on the amount of hashing power on the network.
This is done to ensure that blocks are not produced too quickly, and to ensure the ongoing security of the network. Bitcoin
, for instance, sets the block time at roughly ten minutes (the average time it takes to find a new block). If blocks are consistently taking longer to find, the target will be increased. If blocks are found too quickly, it will be decreased.
The target is a number that is reset periodically. To successfully mine a block, the miner must find a hash
lower than this number. We can use a simple example here. Suppose that we have the term “binance,” and we want to produce a SHA256 hash whose first character is “0”. We can keep adding numbers to “binance” (i.e., “binance1”, “binance2”, “binance3”), and hash it until we get there.
By the time we get to ‘binance10’, we’ve got it (check for yourself
). If we want the first two characters to be “0”, we need to keep hashing until “binance99”. To get three zeros, we had to hash until “binance458”. But what about four zeros? Out of the first twenty million numbers, there isn’t an input that gives us such an output.
This should give you an idea of how mining works, with the difference being that miners are attempting to find a number that falls under a target. The lower this is, the less likely they are to find a solution. This is why Bitcoin consumes so much computational power – miners are hashing variations of the same information over and over.
Because it is so difficult to mine Bitcoin, participants have long since abandoned regular PCs and graphics cards in favor of purpose-built hardware (ASICs