[bitcoin-dev] Hardfork to fix difficulty drop algorithm

[Luke Dashjr <luke@dashjr.org>]

We are coming up on the subsidy halving this July, and there have been some 
concerns raised that a non-trivial number of miners could potentially drop off 
the network. This would result in a significantly longer block interval, which 
also means a higher per-block transaction volume, which could cause the block 
size limit to legitimately be hit much sooner than expected. Furthermore, due 
to difficulty adjustment being measured exclusively in blocks, the time until 
it adjusts to compensate would be prolonged.

For example, if 50% of miners dropped off the network, blocks would be every 
20 minutes on average and contain double the transactions they presently do. 
Even double would be approximately 850-900k, which potentially bumps up 
against the hard limit when empty blocks are taken into consideration. This 
situation would continue for a full month if no changes are made. If more 
miners drop off the network, most of this becomes linearly worse, but due to 
hitting the block size limit, the backlog would grow indefinitely until the 
adjustment occurs.

To alleviate this risk, it seems reasonable to propose a hardfork to the 
difficulty adjustment algorithm so it can adapt quicker to such a significant 
drop in mining rate. BtcDrak tells me he has well-tested code for this in his 
altcoin, which has seen some roller-coaster hashrates, so it may even be 
possible to have such a proposal ready in time to be deployed alongside SegWit 
to take effect in time for the upcoming subsidy halving. If this slips, I 
think it may be reasonable to push for at least code-readiness before July, 
and possibly roll it into any other hardfork proposed before or around that 
time.

I am unaware of any reason this would be controversial, so if anyone has a 
problem with such a change, please speak up sooner rather than later. Other 
ideas or concerns are of course welcome as well.

Thanks,

Luke